Accounting changes may arise as part of a spin-off, sale, or business combination. Presentation and disclosure considerations vary depending on the circumstances.

30.10.1 Spin-off or sale of a subsidiary of an SEC-registered reporting entity

Reporting entities sometimes sell or spin-off divisions or subsidiaries. A spin-off is a transaction in which a portion of a reporting entity (e.g., division or subsidiary) becomes a new, separate reporting entity and the shareholders of the original reporting entity receive a pro rata ownership in the spun-off reporting entity.
When a division or subsidiary is preparing its financial statements to facilitate a sale or spin-off, the division or subsidiary usually follows the accounting principles of its parent. When a division or subsidiary is spun-off, it can change to an accounting principle different from that used by its parent, provided that the change is preferable. Such a change in accounting principle should be retrospectively applied in the financial statements.
The spun-off reporting entity must disclose the nature of the change in accounting principle and explain why the newly adopted accounting principle is preferable.
A spun-off reporting entity cannot, however, retrospectively reflect changes in estimates. Such changes should be reflected in the period in which they occur in both the consolidated (if applicable) and spun-off reporting entity's financial statements.

30.10.2 Conforming accounting policies of acquired entities

The need to conform the accounting policies of an entity acquired in a business combination to those of the acquiring reporting entity is discussed in BCG 2.12.
Expand Expand

Welcome to Viewpoint, the new platform that replaces Inform. Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory.

signin option menu option suggested option contentmouse option displaycontent option contentpage option relatedlink option prevandafter option trending option searchicon option search option feedback option end slide