Demystifying carve-out financial statements

The economic impact of the pandemic may result in companies looking to shed their non-core assets, which may lead to an increase in transactions requiring carve-out financial statements. With limited guidance, it’s no wonder preparers have questions. In this episode, Heather Horn is joined by PwC’s Andreas Ohl and Elizabeth Crego to discuss the judgments involved in preparing carve-out financial statements.1:11 - Introduction. What information do carve-out financial statements contain and when should a seller prepare them? We kick things off with an overview of different types of divestitures and when these transactions may require financial statements to be filed with the SEC. 9:18 - Top accounting issues. Next we dive into some of the key accounting issues companies may face in the preparation of these statements, including:9:31 - Basis of presentation15:07 - Allocation of expenses18:47 - Goodwill21:11 - Taxes22:09 - Subsequent events25:5  - Parent company considerations26:42 - Key success factors. In order to be successful with these types of statements, we close by sharing helpful reminders.Andreas Ohl is a partner in PwC's National office where he focuses on mergers and acquisitions under US GAAP and IFRS. Andreas is chairman of the Business Valuation Standards Board at the International Valuation Standards Council, is a member of the working group that authored the AICPA's In-Process R&D guide, and has served as a member of the FASB's Valuation Resource Group. Liz Crego is a managing director in PwC’s Deals practice focused on accounting and financial reporting advisory services for transformative M&A integration, divestiture separation, IPOs and capital raising projects. With over 14 years of experience, she has worked closely with c-suite executives to deliver some of the most iconic mergers and divestitures in recent business history. Heather Horn is PwC’s National office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With over 25 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to [email protected].