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One of two principal methods of accounting for business combinations through an exchange of common stock. In contrast to the other method, purchase accounting, a pooling of interests is accounted for by adding together the book values of the combined companies. In purchase accounting, good will is often created which must be amortized against earnings over a forty year period. Pooling of interests is often preferred, but the companies involved in the pooling must meet clearly defined guidelines for independence for a two year period prior to the acquisition and agree to avoid systematic or preplanned changes in ownership of the combined operation. See also Purchase Accounting.
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