4.6 Related-Party Disclosures
Upon the preparation of carve-out financial statements, certain intercompany
transactions that were historically eliminated in the consolidated parent-company
financial statements may no longer be removed. Instead, such transactions would
represent related-party transactions that must be disclosed in accordance with ASC
850. Further, for carve-out financial statements that are filed with the SEC (e.g.,
financial statements for a registrant and its predecessor and a significant acquiree
under SEC Regulation S-X, Rule 3-05), management must consider the additional SEC
financial reporting requirements under SEC Regulation S-X, Rule 4-08(k), as well as
proxy-related disclosures.
In addition, certain existing business relationships with the parent entity, for
example, or with subsidiaries that are not part of the carve-out transaction
(including members of management and the parties’ boards of directors) may continue
after the carve-out transaction is completed. If so, management of the carve-out
entity must evaluate whether those transactions continue to represent related-party
transactions.