Are parent company footnote or schedule disclosures required?
Interpretive Response: Only the parent company footnote disclosures are required. The subsidiary’s restricted net assets are computed as follows: Restriction Computed Restriction Net assets: currently $75, cannot be less than $20; therefore $20 Dividends: 80% of accumulated earnings ($45) cannot be paid; therefore $36 Current ratio: must be at least 2:1 ($46 current assets must be maintained since current liabilities are $23 at fiscal year-end); therefore $46 Restricted net assets for purposes of the test are $20. The amount computed from the dividend restriction ($36) and the current ratio requirement ($46) are not used because net assets may be transferred by the subsidiary up to the limitation imposed by the requirement to maintain net assets of at least $20, without violating the other restrictions. For example, a transfer to the parent of up to $55 of net assets could be accomplished by a combination of dividends of current assets of $9 ($45-36), and loans or advances of current a
