I want help to reply to this post with a critical opinion and suggest a better alternative.

Business Combination Methods.

The question: in Business Combination Methods which method is theoretically most appropriate? Or do economic circumstances exist that dictate more than one method? If so, which methods would be most appropriate (and under what circumstances)?be sure to adequately address the advantages and disadvantages of a single method vs. multiple methods.

keep in mind that a business combination could range from an all-stock transaction (a stock swap) to an all-cash transaction. Also keep in mind that some combinations are clearly acquisitions, while others are more like mergers.

The post:

The purchase method is going to be advantageous for an acquisition. An acquisition will recognize the constituent companies as a parent and a subsidiary. The new entity approach is going to be advantageous for a merger. If a new merger only had a single method to chose from, the purchase method, this would be quite difficult for them to select the combinee and combinor when their goal is to create an entirely new operation. It would be unclear which constituent companies need to be revalued. In opposition, a combinor is not likely to acclimate to revaluing their own assets when they're the controlling interest. Whether the purchase is all cash, partly cash, or no cash the purchase method will still represent an acquisition best as the controlling ownership, or parent company, will hold true to their current balance sheet values and consolidate with the subsidiary's FMV. Although there is less academic research and guidance on the new entity approach, the risk outweighs the benefit of the merger representing the market value of the combined enterprise.

The pooling of interests is old, and there is no clear difference between pooling and the purchase method from the market's view. There are beneficial features, like avoiding goodwill and representing higher income, but without a significant purpose within differences and lack of support from academic researchers I'll exclude this method. This leave the purchase method and the new entity approach as accounting methods for business combinations.