Accounting procedures for business combinations differ among countries. In most countries, pooling of interests accounting is unacceptable, while accounting standards in some countries permit goodwill to be written off directly against stockholders" equity at the time of a business combination treated as a purchase.

Required

a. Over the years, many U.S. companies complained they were at a disadvantage when competing against foreign companies in purchasing other business enterprises because, unlike U.S.

companies, most foreign companies did not need to capitalize goodwill. Why were U.S.

companies opposed to capitalizing goodwill?

b. What arguments can be made to support the elimination of pooling of interests accounting and requiring all business combinations to be treated as purchases?

c. Should U.S. companies care about accounting standards other than those that are generally accepted in the United States? Explain.