The Financial Accounting Standards Board's recent rethinking of its proposed ban on pooling-of-interest accounting for mergers, coupled with the inauguration of FAS 133 and the amendments to the Erisa "Underwriter Exemptions," should provide an interesting beginning to the year 2001.

The FASB had voted last year to explicitly eliminate pooling-of-interest accounting by Jan. 1, 2001, meaning that companies would be required to use purchase accounting to record every merger or acquisition. Acquirers tend not to like purchase accounting because it forces them to take additional depreciation and amortization charges that dilute reported earnings and can trigger a negative market response.

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