Pooling Method
Flaherty Company entered into a business combination with Steeley Company in March 2001. The combination was accounted for as a pooling of interests. Registration fees were incurred in issuing common stock in this combination. Other costs, such as legal and accounting fees, were also paid.
a. In the business combination accounted for as a pooling of interests, how should the assets and liabilities of the two companies be included within consolidated statements? What was the rationale for accounting for a business combination as a pooling of interests?
b. In the business combination accounted for as a pooling of interests, how were the registration fees and the other direct costs recorded?
c. In the business combination accounted for as a pooling of interests, how were the results of the operations for 2001 reported?
(AICPA adapted)
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