WASHINGTON - The U.S. Financial Accounting Standards Board has provided a window of opportunity for M&A activity in its final proposal to eliminate pooling of interests as a method of accounting for business combinations. In its proposal issued last week, FASB chose not to make the new reporting requirements retroactive. Thus if the new rules come into force in January 2001 as proposed, the next 15 months could see a rush to complete new business combinations.

As expected, FASB would eliminate pooling and make the purchase method of accounting mandatory. Under purchase accounting, one company is identified as the buyer and records the company being acquired at the cost it actually paid. Goodwill, the excess of the purchase price over the fair value of the acquired company's net assets, would be charged to the acquirer's earnings over a maximum of 20 years.