Accounting for a joint venture. Exhibit 13.12 presents selected balance sheet data for Parrot Corporation and for a joint venture in which it has a 50% ownership interest.
a. Prepare a balance sheet of Parrot Corporation in which it accounts for its investment in the joint venture using proportionate consolidation instead of the equity method.
b. Compute the liabilities-to-assets ratio and the debt-equity ratio for Parrot Corporation assuming Parrot Corporation accounts for its investment in the joint venture using (1) the equity method, and (2) proportionate consolidation.
c. Explain the reason for the differences in the debt ratios computed in part b for each accountingmethod.

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Parrot Corporation and Joint Venture (Exercise 27) EXHIBIT 13.12 Parrot Corporation Joint Venture Current Assets .... Property, Plant, and Equipment (net)... Investment in Joint Venture (equity method) Tatal Assets ... S 300 $200 600 500 200 $1,000 $800 $ 250 Current Liabilities. $150 Long-Term Debt 450 250 $ 700 Tatal Liabilities $400 Shareholders' Equity. 300 400 Total Liabilities and Shareholders' Equity.. $1,000 $800