Analyse how the choice of accounting method for intercorporate investments changes financial statements and ratios

Net income attributable to the parent is the same whichever method is used, because the investor's share of the investee's profit reaches it either way, with any non-controlling share shown separately under full consolidation. What changes is everything above it. The equity method shows a single line on the balance sheet and income statement, so revenue, assets and liabilities are smallest and margins and return on assets look highest. Proportionate consolidation, not permitted for joint ventures under IFRS or US GAAP (which use the equity method) but useful to analysts as a comparison, adds a share of each line. Full consolidation adds all of the subsidiary's revenue, assets and debt, raising leverage and usually lowering net margin and return on assets. Full goodwill raises assets and equity relative to partial goodwill, lowering return on equity. The trap is thinking a method choice changes profit; it changes ratios.