When a company acquires another company and pooling-of-interest accounting is used, the statement of cash flows (after acquisition) will show a cash outflow in the investing section equal to the book value of the acquired company.

Question

Quizplus · Accepted Answer

When pooling-of-interest accounting is used for a business combination, the acquired company's assets and liabilities are recorded at their book value, and no goodwill is recognized. Therefore, there is no cash outflow in the investing section of the statement of cash flows equal to the book value of the acquired company.

When a Company Acquires Another Company and Pooling-Of-Interest Accounting Is