Equity Method and Proportionate Consolidation Method - Shareholders Equity

[archived_user]

Hi,
The CFA Curriculum states that Shareholders Equity will be the same under both method. How is this the case? Both on the Acquisition date and in periods after the Acquisition.
Thanks for the help

 

[archived_user]

Under the equity method we show only the (net) investment in the subsidiary as an asset. There is nothing in Liabilities nor Shareholders’ Equity related to the investment (apart from the effect of the investment on Net Income, which flows into Retained Earnings).
Similarly, in consolidation there is nothing in Shareholders’ Equity related to the investment (again, apart from the effect of the investment on Net Income, which flows into Retained Earnings).