In May 2020, the Securities and Exchange Commission approved amendments to the requirements for financial statements relating to acquisitions and dispositions of businesses, including real estate operations, in Regulation S-X Rule 3-05, Financial statements of businesses acquired or to be acquired; Rule 3-14, Special instructions for real estate operations to be acquired; Article 11, Pro Forma Financial Information; and other related rules and forms. Companies are not required to apply the final amendments until the beginning of their fiscal year following December 31, 2020. However, voluntary compliance is permitted now as long as the amendments are complied with in their entirety.

Under Rule 3-05, a registrant that acquires a business other than a real estate operation is generally required to provide separate audited annual and unaudited interim pre-acquisition financial statements of the business if the acquired business is “significant” to the registrant. Rule 3-05 addresses the reporting requirements for businesses acquired or to be acquired based on the “significant subsidiary” definition in Rule 1-02(w) of Regulation S-X using a sliding scale approach. Similarly, under Rule 3-14, a registrant that has acquired, or proposes to acquire, a significant real estate operation similarly must file separate audited annual and unaudited interim abbreviated income statements with respect to such operations. Additionally, registrants required to file financial statements under Rules 3-05 or 3-14 are required to file unaudited pro forma financial information as prescribed by Article 11. The pro forma financial information is based on the historical financial statements of the registrant and the acquired or disposed business, and generally includes adjustments intended to show how the acquisition or disposition might have affected those financial statements had the transaction occurred at an earlier time.