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

As with its balance sheet approach, in preparing carve-out financial statements, management can work through most parts of the historical income statement line by line to determine the carve-out entity’s revenue and expenses. Because revenue is typically what defines a business, it often is not difficult to attribute revenues to the carve-out entity’s financial statements. Complexities may arise, however, when historical intercompany revenues or related-party transactions exist, and when management is determining the appropriate allocation of certain expenses to the carve-out entity.