It is inappropriate to consolidate a subsidiary that is prohibited by law from making loans to its parent.

Name: It is inappropriate to consolidate a subsidiary that is prohibited by law from making loans to its parent.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Consolidation of a subsidiary in financial statements is based on control, not on the ability to make loans to its parent. If the parent company has control over the subsidiary, it is appropriate to consolidate, regardless of legal restrictions on inter-company loans.

It Is Inappropriate to Consolidate a Subsidiary That Is Prohibited