Because the intent of carve-out financial statements is to isolate transactions related to the entity that will be carved out, preparers must (1) identify the types of intercompany transactions that have historically occurred between the carve-out entity and the remaining entities and (2) determine how those transactions and related account balances will be presented in the carve-out financial statements. Although these transactions were originally eliminated in consolidation of the parent entity’s financial statements, they generally should not be eliminated from the carve-out financial statements (unless the intercompany transactions take place within the carve-out entity).
...Chapter 3 — Accounting Considerations Related to a Carve-Out Entity’s Statement of Comprehensive Income
3.2 Intercompany Transactions
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