I am looking at an example that shows the total assets and total liabilities on the balance sheet being higher when using proportionate consolidation vs. the equity method. I see that this is bc of the debt and other assets accounts. Can’t quite rationalize why this is… help
Devil is in the details… That is the method… In proportionate consolidation - you are accounting for proportionately portion of assets and equity of the subsidiary. In the Equity method - only the Proportionate portion of Net assets is included. You have a 1 liner -> Investment in Associate in Equity method. That # is removed in Prop Consolidation and replaced by assets and liabs going up.
Also notice that the higher assets/liabilities under proportionate consolidation cancel each other out. Equity is the same under both methods.