Deloitte
Accounting Research Tool
...
Chapter 2 — Accounting Considerations Related to a Carve-Out Entity’s Statement of Financial Position

Chapter 2 — Accounting Considerations Related to a Carve-Out Entity’s Statement of Financial Position

Chapter 2 — Accounting Considerations Related to a Carve-Out Entity’s Statement of Financial Position

Before preparing carve-out financial statements, management must determine the purpose of such financial statements and what portion of the parent entity’s operations, assets, and liabilities should be included in them. Entities will often begin by going through the balance sheet of the parent entity line by line (e.g., cash; accounts receivable; property, plant, and equipment [PP&E]). Balance sheet items that are inherently related to the carve-out entity, such as PP&E, can often be readily attributed to the carve-out financial statements. For many of the balances, however, balance sheet items may not be easily identified (e.g., when the balance sheet item is a mixture of the portion of the operations to be included in the carve-out transaction and the portion that is not to be included). This chapter addresses some of the more complex balance sheet items.