1. An entity may desire to reorganize its operations in response to its business needs. For example, an entity (the “spinnor”) may transfer assets into a new legal spun-off entity (the “spinnee”) and distribute the shares of the spinnee to its shareholders, without the surrender by the shareholders of any stock of the spinnor. Such a transaction is commonly referred to as a “spinoff. ” Consider the following example: Big Company owns and operates a mall and a retail store that occupies the anchor store position in that mall. The mall and the store are managed by two separate divisions. The shareholders of Big Company would like to split Big Company into two companies so that each can focus on its own operations. To achieve this, Big Company transfers the mall’s assets and operations into a newly created subsidiary, Mall Company, and distributes the shares of Mall Company to its shareholders on a pro rata basis in a spinoff. Copyright © 2008, Financial Accounting Standards Board Not for redistribution Page 12. A spinoff allows an entity to be reorganized in a manner that allows it to meet th
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