Transaction costs of a divestiture may include finder’s fees, and advisory, legal, accounting, valuation, and other professional or consulting fees. Consideration should be given to which entity (the parent entity or the carve-out business) benefitted as a result of each transaction cost. If the carve-out entity derived any benefit, the transaction-related cost should be allocated to the carve-out financial statements based on the methods described in CO 5.2.

Additionally, it is not uncommon for a parent to pay a one-time "stay bonus" to employees of the carve-out business to entice the employees to continue their employment with the carve-out business through the transaction date. As the carve-out business continues to benefit from the service provided by these employees, we believe the carve-out entity should analogize to the guidance in SAB Topics 1.B and 5.T, and accordingly, record an expense in the carve-out financial statements related to this arrangement.