2.4 Debt

Third-party debt issued by a carve-out entity that is the legal obligor would be reflected in the carve-out entity’s financial statements, including any transaction costs and interest associated with the debt. Similarly, ASC 805-50-30-12 indicates that an acquiree should recognize in its separate financial statements an acquisition-related liability incurred by the acquirer only if the liability represents an obligation of the acquiree in accordance with other U.S. GAAP. Therefore, in preparing carve-out financial statements, entities should only attribute parent-entity debt to the carve-out financial statements if the parent-entity debt represents an obligation of the carve-out entity in accordance with other U.S. GAAP (e.g., when a legal entity that is included in the carve-out financial statements is jointly and severally liable with the parent).