Our Business Combination Accounting Method Choice

Accounting for business combination has been a issue concerned both in the field of accounting theory and practice. Using different approach to measure business combination will lead to different accounting result and even different economic result and may also influence the combination itself. FASB and IASB eliminated the "pooling of interest" method one after another. In the trend of international accounting standard convergence, how should we do? To eliminate "pooling of interest" method or not, and if we retain it, how do we set up the criteria for choosing accounting approach? That is the question which to be discussed in this paper.The whole content of this paper is divided in five parts.In the first part, the concepts and characteristics of business combination are discussed. The concepts of business combination are dissertated separately from litigation and accounting aspects. And the characteristics of business combination are divided into two kinds: acquisition and pooling of interests.In the second part, theoretical hypotheses of the two accounting approaches are discussed at first, then the differences between the two accounting processes and the results led by those differences.In the third part, first the history of pooling of interests method in USA and IASC is reviewed, and then based on it shortcomings of pooling method and are discussed.In the forth part, the situation of business combination in China comes first, then the prospect and existing problems of combination consummated by changing shares in China are discussed, finally, suggestion of retaining "pooling of interests method" which is based on discussing of international coordination on accounting standards and limitations of using purchase method in China is presented.In the fifth part, criteria of choosing accounting approach in business...