What’s the difference between Purchase Accounting and Pooling Accounting in an M&A deal?

In purchase accounting the seller’s shareholders’ equity number is wiped out and the premium paid over that value is recorded as Goodwill on the combined balance sheet post-acquisition. In pooling accounting, you simply combine the 2 shareholders’ equity numbers rather than worrying about Goodwill and the related items that get created.

There are specific requirements for using pooling accounting, so in 99% of M&A deals you will use purchase accounting.