Combined and/or carve-out financial statements

KPMG’s application guidance on the preparation of combined and/or carve-out financial statements. KPMG aims to highlight practice where IFRS is applied consistently globally, and to draw attention to those areas in which we have observed diversity in the application of IFRS.

Applicability

• All companies that prepare IFRS combined and/or carve-out financial statements

Relevant dates

Effective immediately

Key impacts

• Combined and/or carve-out financial statements are frequently prepared for capital market transactions based on regulatory requirements or in conjunction with contractual arrangements related to private M&A transactions
• The objective of combined and/or carve-out financial statements is to provide useful and relevant financial information to (potential) investors and creditors about one or more of the economic activities that are part of a larger reporting entity
• In preparing combined and/or carve-out financial statements, the reporting entity is tailored to meet the specific purpose for which the financial statements are being prepared, and does not have to constitute an existing legal entity or group
• IFRS does not contain any specific pronouncements addressing accounting issues related to the preparation of combined and/or carve-out financial statements
• The SEC has issued several pronouncements that address combined and/or carve-out financial statements prepared under US GAAP. In addition, for the purpose of ad hoc reporting in conjunction with significant acquisitions by SEC registrants in accordance with Reg S-X 3-05, combined and/or carve-out financial statements prepared on the basis of IFRS might be reported under certain circumstances
• KPMG’s publication represents application guidance addressing the key aspects of accounting related to the preparation of combined and/or carve-out financial statements in accordance with IFRS. It is enhanced by illustrative example disclosures related to real live transactions. In addition, it includes practical considerations related to the preparation process including project management and issues around IT systems and data gatherings

Report contents

• Introduction to combined and/or  carve-out financial statements
• Boundaries of the reporting entity
• Overall approach to preparing the  financial statements
• Accounting policies and estimates
• Disclosures
• Practical considerations

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