Consolidated SPE ratios understand, decrease, question, already

dvilayphet

Hi,

Came across a question from a mock exam asking what are the changes on ROA and ROE after a SPE is consolidated to the beneficiary.

Answer key says both ROA and ROE will decrease. I understand the ROA, but why would ROE decrease? I thought the equity method already bumps up the NI by the proportionate amount, which in turn bumps up Equity. How would consolidating decrease ROE?

Thanks