Appendix C — Roadmap Updates for 2023

Updated to highlight key considerations and common pitfalls associated with preparing carve-out financial statements.

Introduction

Added description of SEC forms used in certain carve-out transactions.

Basis of Presentation: Identifying the Carve-Out Entity’s Assets, Liabilities, and Operations

Clarified discussion of the legal-entity and management approaches.

Spin-Offs and Reverse Spin-Offs

Added table illustrating the financial statement presentation for forward and reverse spin-offs.

Accounting Considerations Related to a Carve-Out Entity’s Statement of Financial Position

Added (1) general principles to consider in the allocation of assets and liabilities to the carve-out entity and (2) discussion of shared assets.

Parent-Entity Net Investment in the Carve-Out Entity

Added discussion of equity presentation in carve-out financial statements.

Working Capital

Added discussion of cash pools.

Expenses Clearly Applicable

Added list of allocation factors that may be appropriate depending on circumstances.

Earnings per Share

Added discussion of presentation of EPS in consolidated or combined carve-out financial statements.

Effective Dates for Certain Accounting Standards

Updated to simplify discussion and reference other roadmaps.

Pro Forma Financial Information

Added discussion of pro forma requirements for parent entity that divests of a carve-out entity.