WASHINGTON - The Financial Accounting Standards Board expressed doubt Wednesday about an industry alternative to its proposal that would eliminate pooling-of-interests accounting for mergers.

Representatives of Morgan Stanley Dean Witter & Co., Goldman Sachs & Co., Deloitte & Touche, PricewaterhouseCoopers, and Arthur Andersen recommended that goodwill be recorded on the books as an asset and tested for reductions in value.

The presentation contrasts the FASB's original proposal, under which goodwill - the difference between a company's acquisition price and its underlying assets - would be written off over a 40-year period under the purchase method of accounting.

Elimination of pooling has been controversial because many companies argue that amortizing goodwill under the FASB's proposal automatically assumes it to be a diminishing asset. The presenters recommended a model "impairment" test Wednesday that would let companies evaluate goodwill and then account for gains or losses in its value.

Though FASB Chairman Edmund L. Jenkins said the presentation would be a part of future deliberations on the issue, he noted that similar proposals have produced negative feedback.

"Most companies have told us they'd rather write [goodwill] off immediately than take an impairment charge at an uncertain later date," Mr. Jenkins said.

Representatives from Morgan Stanley and Goldman Sachs argued that goodwill should not be amortized, because it introduces more error into analysts' attempts to predict earnings from financial statements and fails to accurately reflect economic reality. The argument drew a heated response from one board member, who argued that the FASB's purpose is not to serve analysts.

"I don't think accounting models can attempt to make earnings more forecastable," said FASB Vice Chairman James J. Leisenring. "That absolutely can't be the driving issue."

The FASB's stated purpose in eliminating pooling-of-interests in favor of purchase accounting is to make financial statements more transparent for investors. At a House Commerce subcommittee hearing last month, Mr. Jenkins said, "In a pooling, the book values of combining companies are merely added together without recognizing the actual price one company paid to acquire the other." Under purchase accounting, the acquiring company would have to take a charge against earnings for the value of goodwill.

A representative for the American Bankers Association said that while she has yet to review the details of the impairment test proposed Wednesday, her group has consistently supported the notion of capitalizing goodwill and testing it for changes in value. "It was good to see analysts confirm bankers' views about goodwill," said Donna J. Fisher, the ABA's director of tax and accounting.

The FASB is expected to release a final rule eliminating pooling-of-interests accounting in mergers by yearend.

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