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. Also may influence the combination itself. FASB and IASB eliminated the pooling of interest method. 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 four parts.The introduction expounds relevant achievements in this field along with the meaning, approach and structure of this paper; and concretely arranges innovative contents of this paper.Following the introduction, the theory part illustrates the purchase method and the pooling of interest method respectively. In terms of theory price, preparation method and financial effects, the text analyzes the differences between the purchase method and the pooling of interest method.. In the second segment it illustrates the evolvement of combination method adopted by western countries could be used by reference in Chinese characterized economy. In the third segment the conclusion is: oriented by purchase method, we should allow the existence of pooling method, but limited. With the improvement of market economy, purchase method serves the sole available one instead of pooling of interest method, which will be gradually eliminated. However, the paper is still deficient in research scope and approach and will be improved. The fourth segment author analyzed the possible impact of《Enterprise Accounting Standard No.20—Business Combination》on the Chinese accounting practices in the fourth part of the article. Author thinks that the choice of accounting methods could have profit manipulation. In my view, these issues should arouse the attention of the relevant departments to strengthen supervision so that the《Enterprise Accounting Standard No. 20—Business Combination》can really play a normative role in accounting practices, rather than become a profit manipulation tools.