I might be just really tired at this point. But one of the schweser mock exams mentioned that total assets will be higher with proportional than equity. I can’t rationalize why, thoughts?
Also if this question is blatantly obvious: remember to DIVIDE the option value calculated with binomial method by (1+risk free rate) . Hope this was helpful
With Equity all you do is add an “Investment in Associate” account on BS (Investment + Proportionate Share * N.I - Proportionate Share * Div)
For Proportionate (i.e. JV) you actually add line by line by your proportion. You acquire 50% of Comp A… therefore your assets are 50% higher thanks to Comp A.
Equity Method : Decrease in cash, increase in equivalent investment account in associate Acquisition Method : Decrease in cash, increase in asset and liability. Minority interest in equity section. Proportionate Consolidation Method : Decrease in cash, increase in propotionate asset and liability. No minority interest.
Very good!