_____ A publicly owned company has only one subsidiary. Under regulatory rules, the subsidiary cannot pay dividends to the parent above a certain amount. Under the SEC's rules, this restriction must be disclosed
A) Regardless of materiality.
B) If the subsidiary's total assets are more than 25% of the total consolidated net assets.
C) If the subsidiary's restricted net assets exceed 25% of consolidated net assets.
D) If the subsidiary's net assets exceed 25% of consolidated net assets.
E) None of the above.

Question

Quizplus · Accepted Answer

The correct answer is C because according to SEC rules, a restriction on the ability of a subsidiary to transfer funds to the parent company in the form of dividends must be disclosed if the subsidiary's restricted net assets exceed 25% of the total consolidated net assets. This is considered a significant restriction that could impact the parent company's liquidity and financial flexibility, hence the need for disclosure.

_____ a Publicly Owned Company Has Only One Subsidiary