2810.1 Parent-only Financial Statements — Requirement
GAAP requires parent-only financial statements as a supplement to the consolidated financial statements where material. [ASC 810-10-45-11] S-X 5-04, 7-05 and 9-06 require parent-only financial statements when the restricted net assets of consolidated subsidiaries exceed 25% of consolidated net assets at the most recent fiscal year-end. In these instances, registrants should present the information required by S-X 12-04 as an S-X schedule, except bank holding companies, which must present the S-X 12-04 information in the financial statement footnotes. Because bank holding companies must include the S-X 12-04 information in their financial statement footnotes, they do not have the additional 30 days provided by Form 10-K General Instruction A(4) to file this information.

S-X 12-04 indicates the required condensed financial information need not be presented in greater detail than is required for condensed statements by S-X 10-01(a)(2), (3), and (4). The condensed financial information presented should include a total for comprehensive income presented in either a single continuous statement or in two separate but consecutive statements.

2810.2 Parent-only Financial Statements - Restricted Net Assets Defined

Restricted net assets is the amount of the registrant's proportionate share of consolidated subsidiaries' net assets, after intercompany eliminations, (assets less the sum of liabilities, redeemable preferred stock, noncontrolling interests) that may not be transferred to the parent by subsidiaries in the form of loans, dividends, etc., without a third party's consent. [S-X 1-02(dd) and SAB Topic 6K.2] Also, in certain circumstances, registrants must compute "subsidiary adjusted net assets". See SAB Topic 6K.2 for further discussion.

2810.3 Restricted Net Asset Footnote Disclosures S-X 4-08(e)(3)]

S-X 4-08(e)(3) requires footnote disclosure in the consolidated financial statements about the nature and amount of significant restrictions on the ability of subsidiaries to transfer funds to the parent through intercompany loans, advances or cash dividends, when material. When considering materiality, a registrant should consider its proportionate share of the net assets of its consolidated and unconsolidated subsidiaries and its equity in the undistributed earnings since the date of acquisition of the 50% or less owned persons accounted for by the equity method (i.e. the same amount required to be disclosed pursuant to S-X 4-08(e)(2)) as of the end of the most recent fiscal year which are restricted as to transfer to the parent company because the consent of a third party (a lender, regulatory agency, foreign government, etc.) is required.

2810.4 Parent Company Financial Information when the Registrant has a Consolidated Shareholders' Deficit (Last updated: 6/30/2010)

A registrant with a consolidated shareholders' deficit is considered to have a net asset base of zero for the purpose of computing its proportionate share of the restricted net assets of consolidated subsidiaries. As a result, any restrictions placed on the net assets of subsidiaries with positive equity would result in the 25% threshold being met and a corresponding requirement to provide parent company financial information. This is viewed by the staff as consistent with the guidance in SAB Topic 6K2.b (Question 3), which states that a subsidiary with an excess of liabilities over assets has no restricted assets. Anomalous results can be discussed with CF-OCA.