The answer to this question shows the current ratio for the equity method to be 250/110 = 2.27 and the current ratio for consolidation to be 390/200=1.95. Why are they consolidating 100% of the assets and liabilities instead of 50% which is what the ownership stake was? I thought under consolidation, the current ratio should be 320/155 = 2.06. The answer won’t change, but I don’t understand why they calculated it that way.
under consolidation method, you consolidate 100% of assets and liabilities. Your calculation is for proportional consolidation, which is to add % of stakes.
well crap. thanks.