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The carve-out financial statements may represent a business that was previously acquired by the parent in a business combination.
If stand-alone financial statements were previously prepared and pushdown accounting was not elected, the carve-out financial statements would not reflect the stepped-up basis. However, if the carve-out entity wants to elect pushdown, this is a change in accounting policy and a preferability assessment would be required to apply push-down accounting.
If stand-alone financial statements have not been historically prepared for the business being divested, management can elect to apply pushdown accounting without a preferability assessment.
As pushdown accounting is optional, one component of a carve-out entity could apply pushdown accounting while another component does not. See BCG 10.1 for more information on pushdown accounting.
If, in connection with preparing the business to be divested, the parent entity transferred businesses or net assets between entities under common control, the transferred assets and liabilities will need to be reflected at the ultimate parent's basis whether or not pushdown accounting was elected in the previously prepared stand-alone financial statements.
For more on transfers between entities under common control, see BCG For more guidance on determining the proper basis at which to record transfers of assets or the exchange of shares between entities under common control, see BCG

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