FRA - Joint Venture.. Equity Method vs. Prop Consolidation

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 :slight_smile:

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.