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There are several instances where financial advisory and accounting advisory coincide. One of those instances are situations where a combined carve-out financial statement is required to be prepared.
A company may have several business segments or divisions and decide to sell some parts of it or spin off (turn those parts into a separate company). When this happens, the company needs to prepare financial statements to show what is being sold or spun off.
For example, a company may have 5 divisions and decide to spin off 2 of them into a separate company or sell them.
Because the divisions may not have been preparing separate financial statements, we have to carve out their financial statements from the company that held them as a division. That’s where combined carve-out financial statements come in.
So what are “combined carve-out financial statements”?
Combined carve-out financial statements are a special type of carve-out financial statements that are prepared when two or more business segments or subsidiaries are being sold or spun off as a single business unit.
Before you start wondering - what is the difference between carve-out financial statements and combined carve-out financial statements?
The key difference between carve-out financial statements and combined carve-out financial statements is that combined carve-out financial statements include the financial information for multiple business segments or subsidiaries, while carve-out financial statements only include the financial information for a single business segment or subsidiary.
Neither IFRS nor US GAAP have a specific standard or comprehensive guidance that fully addresses carveouts.
This blog post compiles for you guidance made available by the Big 4 Audit firms to aid those preparing carve-out financial statements.
Carve-out financial statements:
Perspective under IFRS
Source: KPMG
KPMG carve-out financial statements - IFRS Pdf
Source: PwC
PwC carve-out financial statements - IFRS Pdf
Perspective under US GAAP
Source: EY
EY carve-out financial statements - US GAAP Pdf
Source: PwC
PwC carve-out financial statements - US GAAP Pdf
Deloitte carve-out financial statements - US GAAP Pdf
PS: The "Source" represents the owners of the files shared above (downloaded from their public domain as made publicly available by them) and compiled in a downloadable folder here by IFRS IS EASY for your convenience and learning.
Share your experience in the comment section below about preparing carve-out financial statements. Have you had to prepare one before and how difficult or easy was it for you?