It says if it is done under pooling vs acquisition, why would the equity be lower. I searched but could not find the answer
Under pooling everything used to just be bundled together, with no hint of the purchase price. Assets were simply added. If the purchase price exceeded the book value (v likely, given that much is on at cost) the aggregated assets (and equity) would be therefore higher under Acquisition. If the price was higher than the fair value of the assets there would also be a Goodwill entry to assets under Acquisition.
That’s what I thought but one of the answers was higher assets. I picked higher assets and the answer was wrong
drk Wrote: ------------------------------------------------------- > That’s what I thought but one of the answers was > higher assets. I picked higher assets and the > answer was wrong How can assets be higher under pooling? All you are doing is adding book values. When you use the acquisition method, you write up to fair value.