Traditional Bookkeeping Best for Online Companies

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In mid-February, AccountingWeb brought its readers a story about potential changes to accounting rules regarding "pooling of interests."

Late last week, members of the bipartisan lobbying firm, TechNet, testified before the Senate Committee on Banking, Housing and Urban Affairs that the issue of pooling, or changing traditional accounting rules related to mergers & acquisitions, should be kept as it is rather than changing the reporting procedures.

The group argued that revisions of the rules would prevent companies from forming new ventures on the Internet and could, in fact, inhibit economic growth. The rules currently are in review by the Financial Accounting Standards Board (FASB).

The FASB wants to have companies follow the "purchase" method rather than pooling because pooling ignores the values exchanged in a business combination. Anyone reviewing a financial statement cannot tell how much was invested in the transaction, and cannot track the subsequent performance of that investment.


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