Module V· Special Situations & Carve-OutsAdvanced
Question
How does spin-off accounting work when seller shareholders receive the spin-off shares directly?
Answer
In a spin-off, the parent distributes shares of a subsidiary to existing shareholders. The parent deconsolidates the business and records the distribution according to applicable accounting rules. Shareholders own both companies directly after the transaction. Modeling focuses on separation balance sheets, stranded costs, debt allocation, tax treatment, and standalone public-company costs.