Preface
We are pleased to present the 2024 edition of
Carve-Out Financial Statements. This Roadmap discusses key factors for
entities to consider as they prepare their carve-out financial statements.
“Carve-out financial statements” is
a general term used to describe financial statements derived from the financial
statements of a larger parent entity. Such statements are often required when a
parent entity wishes to pursue a sale, spin-off, initial public offering (IPO), or
special-purpose acquisition company (SPAC) transaction involving a portion of the
parent entity. In addition, and as the name implies, carve-out financial statements
are necessary in various types of transactions as a means of reflecting the portion
of a parent entity’s balances and activities that is being “carved out.” Certain SEC
staff guidance addresses some elements of carve-out financial statements (e.g., when
to include them in an SEC filing), and parent entities often refer to the SEC
staff’s guidance on preparing financial statements for nonpublic carve-out entities.
However, there is no single source of comprehensive guidance on preparing carve-out
financial statements.
The 2024 edition of the Roadmap includes updated
and expanded guidance. Appendix
C highlights substantive changes made to the Roadmap since issuance
of the 2023 edition.
Be sure to check out
On the
Radar (also available as a stand-alone publication),
which briefly summarizes emerging issues and trends related
to the accounting and financial reporting topics addressed
in the Roadmap.
This Roadmap is intended to be a helpful guide
but is not a substitute for consulting with professional advisers on complex
accounting questions and transactions. We hope that you will find this publication
useful in dealing with carve-out financial statements.