3.6 Exit or Disposal Costs

In preparing for a carve-out transaction, the parent entity may restructure portions of its business, thereby incurring exit or disposal costs. These costs should be analyzed for allocation to the carve-out entity in accordance with the guidance in Section 3.1. In addition, the parent entity may have incurred exit or disposal costs in historical periods. In preparing carve-out financial statements, the parent entity will have to make determinations about the balance sheet effects, if any, of its prior restructuring activities. See Section 2.8 for considerations related to the identification of the carve-out entity’s liabilities.