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Chapter 3 — Accounting Considerations Related to a Carve-Out Entity’s Statement of Comprehensive Income

3.3 Allocation of Cash-Based Compensation Expense

3.3 Allocation of Cash-Based Compensation Expense

Cash compensation (e.g., salary or bonuses) of employees who provided services to the carve-out entity should be allocated in the carve-out financial statements proportionally to the service provided. For example, if all of an employee’s time is dedicated to the operations of a carve-out entity, all of the employee’s compensation should be allocated to the carve-out financial statements. However, if only part of the employee’s time is spent providing such services to the carve-out entity, we would expect the employee’s compensation to be allocated proportionately.