[Congressional Record Volume 146, Number 30 (Thursday, March 16, 2000)]
[Extensions of Remarks]
[Page E343]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


        PROPOSED ACCOUNTING RULE CHANGES FOR TECHNOLOGY MERGERS

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                           HON. BOB GOODLATTE

                              of virginia

                    in the house of representatives

                        Thursday, March 16, 2000

  Mr. GOODLATTE. Mr. Speaker, in today's rapidly growing technology and 
information markets, the need for maintaining an accounting system that 
is best suited to handle the growing trend of technology sector mergers 
is key. The ``pooling'' system of accounting has made possible some of 
the largest mergers of our time; without this system the unifications 
of Netscape/AOL, Citicorp/Travelers, NationsBank/Bank of America, and 
Daimler/Chrysler quite possibly would have never taken place, reducing 
innovation and benefits to consumers.
  Current regulations allow many high-tech companies to take advantage 
of this ``pooling'' system of accounting, which allows corporations to 
easily merge without attaching a goodwill accounting charge. This is 
the amount paid in an acquisition that is added to the fair market 
value of a company's tangible assets. If the Financial Accounting 
Standards Board has its way, it would require that all mergers be 
viewed not as the melding of separate entities, but as a direct 
purchase, forcing companies to accept the purchase method of 
accounting. This system worked for the bricks and mortar corporations 
of the past, but in the age of high-tech companies whose value lies in 
information, the purchase method of accounting has no place.
  Forcing these high-tech/high performance companies to use the direct 
purchase accounting system will only serve to stifle growth and limit 
our country's edge in this information age. We should take every 
opportunity to support and ensure continued innovation and expansion in 
this technology sector that has done so much to energize our economy. 
This can be accomplished if we say yes to the continuation of pooling 
mergers, and no to attempts to further regulate this important sector 
of our economy.

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