So far, there have been several private letter rulings dealing with section 199. These rulings have been issued on pooling cooperatives, although a thorough review of the facts indicates that all of the cooperatives involved have been conducting their business like non-pooling marketing cooperatives and are pooling cooperatives in name only.

As most of you know, the pooling of interests method simply combined the accounts of each merging company at book value, with no adjustments to reflect market value differences. In addition, retained savings of both companies were also combined.

Effective January 1, 2009 mergers of credit unions will be accounted under the “Acquisition Method” of accounting. Each merger will require an acquirer to be identified. Further, the acquirer is required to recognize the assets acquired and the liabilities assumed to be measured at their fair values as of the date the acquirer achieves control.

Simply put, in accounting for mergers in the past, we have combined the balance sheets of the entities involved. After this Statement becomes effective, that will no longer be the practice.