When a subsidiary of a publicly owned company is restricted from paying dividends to its parent as a result of U.S. regulatory restraints, the Securities and Exchange Commission does not allow that subsidiary to be consolidated.

Question

Quizplus · Accepted Answer

The Securities and Exchange Commission (SEC) allows a subsidiary to be consolidated with its parent company in the financial statements, even if regulatory restraints prevent the subsidiary from paying dividends to its parent. The consolidation is based on control and ownership, not the ability to transfer funds.

When a Subsidiary of a Publicly Owned Company Is Restricted