Intercorporate investments EOC questions

[archived_user]

Question #26. When calculating debt to equity ratio for the consolidation method the answer in the book states $1000 / $1750. Can somebody please explain how we got $1750? I realize that we added $1430 (total equity) and $320 (investment in Boswell), but don’t understand why. Thanks.

 

[archived_user]

You add them because $320 represents the non-controlling interest, which increases equity under consolidation. There is no NCI under the equity method.

 

[archived_user]

Thank you!