When a consolidated subsidiary of a publicly owned company is restricted from transferring funds to its parent as a result of borrowing arrangements or regulatory restraints, the parent must disclose such restrictions in the notes to the consolidated statements only if the subsidiary's total assets exceed 25% of total consolidated assets.

Question

Quizplus · Accepted Answer

The parent must disclose such restrictions regardless of the size of the subsidiary's assets, as these restrictions can significantly impact the parent company's liquidity and financial flexibility, and thus are relevant to the financial statement users.

When a Consolidated Subsidiary of a Publicly Owned Company Is