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vi CONTENTS
3 From Harmonization to IFRS 5.3 he Transactions Approach and

T
Standards as Globally Accepted the Valuation Approach to the
Standards 47 Determination of Profit or Loss in
Accounting 101
Objectives 47 5.4 Ideal Economic Income and
3.1 Introduction 48 Wealth 105
3.2 International Accounting 5.5 Return of Capital and Return
Harmonization 48 on Capital 110
3.3 International Accounting 5.6 Income Ex Ante and Income
Convergence 53 Ex Post 111
3.4 IFRS Standards 55 5.7 The Residual Income Valuation
3.5 IFRS Standards as Global Model 113
Standards? 57 5.8 Information, Measurement
3.6 The IFRS Foundation, the Board and Efficient Contracting
and Related Institutions 58 Perspectives 114
3.7 Due Process 61 Summary 116
3.8 Theories of Regulation 63 Exercises 116
3.9 Challenges for IFRS Standards and References 117
the Board 65
Summary 68 6 Current Values, Mixed Values
Exercises 68 Measurement and CPPP
References 69 Accounting 119
4 The IASB Conceptual Framework Objectives 119
and Accounting Theory 71 6.1 Introduction 120
6.2 History of Current Value
Objectives 71 Accounting Models 120
4.1 Introduction 72 6.3 Current Entry Values 122
4.2 The Role of Accounting Conceptual 6.4 Current Exit Values 124
Frameworks 72 6.5 Comparing Current Entry Values
4.3 The Development of the IASB and Current Exit Values 125
Conceptual Framework 72 6.6 Mixed Measurement Models 126
4.4 The 2018 IASB Conceptual 6.7 CPPP Accounting 129
Framework for Financial 6.8 Combination of Methods 131
Reporting 73 6.9 Some International Practices
4.5 Financial Accounting and and Traditions 132
Reporting Theories 91 6.10 EU Accounting Directive 133
4.6 Approaches to the Formulation of 6.11 IAS GAAP 134
Accounting Theory 93 6.12 IAS 29 on Hyperinflationary
Summary 97 Economies 135
Exercises 97 Summary 138
References 98 Exercises 139
5 Accounting and Economic References 141
Perspectives on Income 7 Fair Values, Value in Use and
and Capital 99 Fulfilment Value 143
Objectives 99 Objectives 143
5.1 Introduction 100 7.1 Introduction 144
5.2 The Allocation Problem in Financial 7.2 What are FV, Value in Use and
Accounting 100 Fulfilment Value? 144
Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
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CONTENTS vii
7.3 IFRS 13 Fair Value 9.7 rinciples and Codes of Corporate

P
Measurement 146 Governance 216
7.4 Applying IFRS 13 147 Summary 219
7.5 The Measurement Process 150 Exercises 220
7.6 Disclosure 152 References 220
7.7 Towards an Appraisal of FV, Value
in Use and Fulfilment Value 152 10 Business Ethics, CSR,
7.8 Valuation and Income Sustainability Reporting
Measurement: Some Overall and SRI 223
Considerations 153 Objectives 223
Summary 155 10.1 Introduction 224
Exercises 155 10.2 Ethics, Business Ethics and the
References 155 Morality of the Markets 224
8 Presentation and Disclosure in 10.3 Perspectives on CSR 227
Published Financial Statements 157 10.4 CSR Principles 229
10.5 Sustainability Reporting 231
Objectives 157 10.6 Socially Responsible
8.1 Introduction 158 Investment 237
8.2 IAS 1 Presentation of Financial Summary 238
Statements 158 Exercises 238
8.3 Financial Statements References 239
under IAS 1 159
8.4 IAS 8 Accounting Policies, 11 The Ethics of the Accounting
Changes to Accounting Estimates Profession 241
and Errors 177 Objectives 241
8.5 IFRS 1 First-Time Adoption of
11.1 Introduction 242
International Financial Reporting 11.2 Professions 242
Standards 186 11.3 The Accounting Profession 244
8.6 EU Directive 2013/34/EU (The 2013
11.4 Ethical Challenges for
Accounting Directive) 188 Accountants 246
8.7 Financial Reporting in the UK
11.5 The 2018 IESBA Code of
(written as at 31 March 2019) 199 Ethics 248
Summary 200 11.6 Applying the Code of Ethics 252
Exercises 201 Summary 253
References 201 Exercises 254
9 Corporate Governance 203 References 254
Objectives 203
9.1 Introduction 204 PART TWO ANNUAL
9.2 Definitions of and Perspectives on FINANCIAL STATEMENTS 257
Corporate Governance 204
9.3 Corporate Governance Issues 208 12 Fixed (Non-Current) Tangible
9.4 Theories of Corporate Assets 259
Governance 209
9.5 Taxonomies of Corporate Objectives 259
Governance Systems 211 12.1 Introduction 260
9.6 A Brief History of Corporations 12.2 Measurement of Fixed (Non-
and Corporate Governance Current) Tangible Assets 261
Mechanisms 212 12.3 Principles of Accounting for
Depreciation 265
viii CONTENTS
12.4 The Revaluation Model 273 15 Leases 347

12.5 Derecognition 276
12.6 Disclosure 277 Objectives 347
12.7 Determining the Cost of a Fixed 15.1 Introduction 348
Asset: Additional Elements 277 15.2 Lease Accounting by the Lessee 351
12.8 Government Grants and 15.3 Lease Accounting by Lessors 358
Assistance 277 15.4 Accounting and Reporting by
12.9 Borrowing Costs 284 Lessors: Finance Leases 359
12.10 Accounting for Investment 15.5 Accounting and Reporting by
Properties 286 Lessors: Operating Leases 362
12.11 Measurement of Investment 15.6 Sale and Leaseback
Property 288 Transactions 363
12.12 Accounting for Agriculture and Summary 364
Biological Assets 291 Exercises 364
Summary 294 16 Inventories 367
Exercises 295
Objectives 367
13 Intangible Assets 301 16.1 Introduction 368
Objectives 301 16.2 Inventories 368
13.1 Introduction 302 16.3 Inventory Systems 372
13.2 Intangible Assets 302 16.4 Reporting Inventory under the
13.3 Recognition of Intangible Scope of IAS 2 372
Assets 303 16.5 Cost of Inventory 374
13.4 Measurement Subsequent to Initial 16.6 Requirements for Inventories under
Recognition 307 the Scope of IAS 41 378
13.5 Useful Life of an Intangible Asset 309 Summary 380
13.6 Derecognition 312 Exercises 380
13.7 Disclosure 312 17 Accounting for Financial
Summary 316 Instruments 383
Exercises 316
References 318 Objectives 383
14 Impairment and Disposal of 17.2 Short History of Accounting for
Assets 319 Financial Instruments 384
Objectives 319 17.3 Problems Identified 386
14.1 Introduction 320 17.4 What is a Financial Instrument? 387
14.2 Impairment of Assets 320 17.5 Distinction between Financial
14.3 Recognition and Measurement of Liability and Equity 389
Impairment Losses 326 17.6 Recognition and Derecognition of
14.4 Non-Current Assets Held for Sale Financial Instruments 391
and Discontinued Operations 333 17.7 Classification and
14.5 Non-Current Assets Held for Sale: Measurement 395
Definition 334 17.8 Compound Financial Instrument
14.6 Measurement of Non-Current Measurement 400
Assets and Disposal Groups Held 17.9 Impairment 401
for Sale 335 17.10 Hedge Accounting 402
14.7 Discontinued Operations 337 17.11 Disclosure 407
Summary 341 Summary 408
Exercises 341 Exercises 408
CONTENTS ix
18 Revenue 413 21 Employee Benefits and

Share-Based Payment 487
Objectives 413
18.1 Introduction 414 Objectives 487
18.2 What is Revenue? 414 21.1 Introduction 488
18.3 The Basic Outline of IFRS 15 416 21.2 Accounting for Short-Term
18.4 Step 1. Identify the Contract(s) with Employee Benefits 489
a Customer 416 21.3 Accounting for Profit-Sharing
18.5 Step 2. Identify the Performance and Bonus Plans 490
Obligations in the Contract 418 21.4 Accounting for Equity
18.6 Step 3. Determine the Transaction Compensation Benefits or
Price 420 Share-Based Payment 491
18.7 Step 4. Allocate the Transaction 21.5 Accounting for Long-Term
Price to the Separate Performance Employee Benefits: Pension
Obligations in the Contract 421 Benefits 502
18.8 Step 5. Recognize Revenue 21.6 Termination Benefits 525
when (or as) the Entity Satisfies a 21.7 Accounting by the Pension
Performance Obligation 422 Fund 526
18.9 Construction Contracts 428 Summary 527
18.10 Contract Costs 431 Exercises 527
18.11 Presentation and Disclosure 432 References 531
Summary 437
Exercises 437 22 Insurance Contracts 533
19 Provisions, Contingent Liabilities Objectives 533

and Contingent Assets 441
22.2 Insurance Contract 534
Objectives 441 22.3 IFRS 4 535
19.1 Introduction 442 22.4 IFRS 17 537
19.2 Problems Identified 442 Summary 541
19.3 Provisions, Contingent Liabilities and
Contingent Assets 444 23 Statement of Cash Flows 543
19.4 Accounting for Provisions, Objectives 543
Contingent Liabilities and 23.1 Introduction 544
Contingent Assets 447 23.2 Profit versus Cash 544
19.5 Specific Application of Recognition 23.3 Cash Flow Reporting 545
and Measurement Rules 451 23.4 Requirements of IAS 7 546
19.6 Disclosure Requirements 454 23.5 Format of Cash Flow
Summary 456 Statement 549
Exercises 457 23.6 Preparation of Statement of
20 Income Taxes 461 Cash Flows 555
Summary 562
Objectives 461 Exercises 562
20.2 The Expense Question 462
24 Disclosure Issues 579
20.3 The Deferred Tax Problem 462 Objectives 579
20.4 IAS 12 and Tax 470 24.1 Introduction 580
20.5 IFRIC 23 and Tax Uncertainties 481 24.2 Disclosure of Segment
Summary 482 Information 580
Exercises 483 24.3 Events after the Reporting
Period 591
x CONTENTS
24.4 Earnings per Share 596 27 Accounting for Associates, Joint

24.5 Interim Financial Reporting 607 Arrangements and Related Party
Summary 611 Disclosures 681
Exercises 611
Reference 616 Objectives 681
27.2 Equity Accounting 682
PART THREE CONSOLIDATED 27.3 IAS 28 Investments in Associates
ACCOUNTS AND THE and Joint Ventures 683
MULTINATIONAL 617 27.4 Equity Accounting in Individual
Financial Statements 687
25 Business Combinations 619 27.5 IFRS 11 Joint Arrangements 688
27.6 Accounting for Joint
Objectives 619 Arrangements 692
25.1 Introduction 620 27.7 Overview Activity on Accounting
25.2 Accounting for the Business for Associates and Joint
Combination: The Basics 621 Arrangements 695
25.3 Accounting for Purchased 27.8 Related Party Disclosures 697
Goodwill 623 Summary 701
25.4 Specific Issues on Accounting for Exercises 701
the Business Combination 629
25.5 Loss of Control 634 28 Foreign Currency Translation 715
25.6 Disclosure Requirements Objectives 715
of IFRS 3 635 28.1 Introduction 716
25.7 Alternative Methods in Accounting 28.2 Currency Conversion 716
for Business Combinations 637 28.3 Currency Translation 716
Summary 640 28.4 IAS 21 Requirements for Entity’s
Exercises 641 Foreign Currency Transactions 717
26 Consolidated Financial 28.5 IAS 21 Requirements for
Translating Foreign Operations for
Statements 645
Consolidation Purposes 720
Objectives 645 28.6 Alternative Translation Methods for
26.1 Introduction 646 Financial Statements of Foreign
26.2 Control 646 Operations 722
26.3 The Need for Consolidated 28.7 Hedge Accounting 728
Accounts 649 28.8 Some Other Issues 729
26.4 Preparation of Consolidated Summary 732
Statements of Financial Exercises 733
Position 650
26.5 Preparation of Consolidated
Statement of Comprehensive
PART FOUR FINANCIAL
Income 661 ANALYSIS 739
26.6 Investment Entities 665
26.7 Alternative Concepts on 29 Introduction to Interpretation of
Consolidation 665 Financial Statements 741
Summary 669
Exercises 669 Objectives 741
29.2 Accounting Information and
Users 742
CONTENTS xi
29.3 Benchmarking 744 31.4 Common Size Analysis 830

29.4 Technique of Ratio Analysis 745 31.5 Segmental Analysis 833
29.5 Additional Information 758 31.6 Ratio Analysis 834
Summary 758 31.7 Ratio Analysis and the IAS/IFRS
Exercises 759 Accounts 836
31.8 Cash Flow Statement 845
30 Interpretation of Financial 31.9 Limitations of Ratio Analysis 847
Statements 767 31.10 Multivariate Analysis 848
Objectives 767 31.11 Investment Perspective 849
30.1 Introduction 768 31.12 Disclosure of Non-Financial
30.2 Industry Analysis 768 Data 850
30.3 Accounting Analysis 773 Summary 857
30.4 Accounting Analysis: The Available Appendix I 858
Accounting Discretion 790 Appendix II 874
30.5 Entity Analysis 798 Exercises 885
30.6 The Reversal Effect 802 References 899
30.7 Quality of Disclosure 803
30.8 Non-GAAP or Pro-Forma Index 901
Accounting Measures 804
Summary 809
Exercises 809
References 810
31 Techniques of Financial
Analysis 815
Objectives 815
31.2 Elements of Non-Comparability in
Financial Statements 817
31.3 Trend Analysis or Horizontal
Analysis 827
PREFACE
WHY THIS BOOK?

Financial reporting is changing. Accounting has always been a reactive service,
changing and developing to meet the practical needs created by the environment
in which it operates. This process of change can be illustrated by both time
considerations and place considerations. In particular, in the days when most business
operations were largely organized within national boundaries, accounting thought,
practices and regulation grew up in significantly different ways in different countries,
consistent with national environments and characteristics, a process discussed in more
detail in Chapter 2.
Now, however, big business is international, and the process and its implications
are moving at a very fast rate. Big business is global in its operations; the demand for
finance is global and the supply of finance is global. The provision of information,
the oil which lubricates any working market, is global in its reach and instantaneous
in its transmission. Financial reporting must of necessity be global too. From slow
beginnings, the International Accounting Standards Board (the Board) is now
poised to become the generally accepted regulator at this international level. Since
2005, every listed EU, Australian and New Zealand company has been required to
produce its group financial statements in accordance with International Accounting
Standards (IAS® Standards) and International Financial Reporting Standards (IFRS®
Standards). Many countries followed this example and now require compliance
with IFRS Standards for their listed companies (e.g. Argentina, Brazil, Canada,
South Korea). Other countries, as diverse as the US and China, are seeking closer
convergence, as a minimum, with IASB® requirements. The US allows accounts
prepared in accordance with IFRS Standards without reconciliations for US stock
exchange listings for foreign registrants.
xiii
xiv PREFACE
The effects on accounting and reporting for business entities operating at a

national or local level, many of them small- and medium-sized enterprises (SMEs),
are unclear and are likely to vary in different places. Two points are very clear to
us, however. First, national needs, characteristics and ways of thinking will remain
significant at the SME level. Second, the application of agreed IAS Standards, a
subjective process of necessity, will continue to be influenced by the context and
environment in which the application takes place.
This book is written to reflect this situation and its implications. A knowledge of
the requirements of IFRS Standards is now essential to anyone studying financial
accounting and reporting, whether the aim is the preparer focus implied by a desire
to enter the accounting professions or the user focus implied by finance, business or
MBA-type programmes aimed at management or the educated public.
But, of course, knowledge is not enough. A critical understanding of issues and
alternatives, of the whys and wherefores, is also required. The author team has
been carefully constructed to contain significant academic, pedagogic and writing
experience and to reflect the diversity of European and international thought and
experience. Our approach is to expose the reader to the issues by a carefully developed
sequence of exposition, student-centred activity and constructive feedback. This
process provides a framework with which the reader can assimilate, understand and
appraise the exposition of international requirements that follow. Only with such an
overall understanding, enhancing both depth and breadth, will the reader be able to
follow, and hopefully participate in, the future development of financial accounting
and reporting as the process of international change continues.
It is important to be clear that our emphasis is on the IASB requirements and
on a full understanding thereof. How those requirements will actually be applied
in detailed practice in the many different countries and cultures involved has to be
largely outside our scope. As already indicated, we certainly believe that there will
continue to be material differences in the practical interpretation and application of
international standards. We give a full justification and explanation of that belief and
provide a framework for analyzing its implications. Nevertheless, it has to be up to
the individual reader and/or teacher, situated in a ‘local’ context, to explore what the
implications of that local context might be.
The discussion of all standards has been updated for this eighth edition and
brought in line with the latest developments in the IFRS ® standards-setting
programme of the Board. This implies that at the time of writing, attention has been
paid to current evolutions and possible changes in the standards taking place in the
near future. For this new edition, we have included new numerical examples and
extracts from company reports from a variety of international corporations to provide
students with illustrations of standards and real-life insight into financial accounting.
STRUCTURE AND PEDAGOGY

The broad structure of the book is as follows: Part One provides the essential conceptual
and contextual background. Parts Two and Three explore the detailed issues and
problems of financial reporting both in general and through the specific regulatory
requirements of the Board – for individual company issues in Part Two and for group and
multinational issues in Part Three. Part Four provides a summation through an in-depth
consideration of financial statement analysis within a dynamic international context.
PREFACE xv
Each chapter follows a similar pattern in terms of pedagogic structure. Learning

objectives set out what the student should be aiming to achieve, with an introduction
to put the chapter into context. There are frequent activities throughout the chapter,
with immediate feedback so that students can work through practical examples and
reflect on the points being made. The chapter closes with a summary and exercises.
Answers to some of the exercises can be found on our dedicated digital resources and
the remainder on the Instructor online support resources.
SUPPLEMENTARY MATERIALS
Students have access to the following resources on the book’s companion website:
• Answers to students’ exercises (at the end of chapters).
• A glossary of accounting and finance definitions.
• Related links.
Instructors have access to the following additional resources (via specific login details
which they can request from the Cengage learning consultant after adoption of the book):
• Answers to students’ exercises.
• Answers to instructors’ exercises.
• PowerPoint slides.
The publishers would like to thank Matt Pinnock, Isthmus Consulting, Ltd, for his
contribution to the supplementary materials. The publishers would also like to thank
John Taylor (formerly Leeds Beckett University, UK), Sulaiman Aliyu (Middlesex
University London, UK), James Griffiths (freelance writer and lecturer, finance and
auditing, UK) and Adriana van Cruysen (Zuyd Hogeschool, The Netherlands) for
their contributions to the digital resources.
This is not a book for those without prior exposure to accounting. A one-year
introductory course in accounting and a basic understanding of the principles of
double-entry, or some practical business exposure, are assumed. However, we
recognize that such earlier work may have taken any variety of different forms, or you
may have approached the subject from any one of several different directions; indeed
you may well not have studied in the English language. The book will be particularly
suitable for the middle and advanced years of undergraduate three- or four-year
degree programmes, for postgraduate programmes requiring an internationalization
of prior studies of a national system and for MBA-type programmes where a true
understanding of the issues and implications of accounting subjectivity and diversity
is required.
LIST OF REVIEWERS
The publishers would like to thank the following academics for their insightful
feedback and suggestions which helped shape the eighth edition:
Dimos Andronoudis, University of Bristol, UK
xvi PREFACE
Nicola Hobday, University of Bath, UK

Hannes Hofbauer, Johannes Kepler University, Austria
Nikos Tsileponis, University of Bristol, UK
Anis Zras, University of Southampton, UK
OFFICIAL EXAM QUESTIONS

We are grateful to the Association of Chartered Certified Accountants (ACCA) and
the Chartered Institute of Management Accountants (CIMA) for permission to
reproduce past examination questions. The suggested solutions in the exam answer
bank have been prepared by us, unless otherwise stated.
IFRS STANDARDS
This product contains copyright material of the IFRS® Foundation in respect of which
all rights are reserved. Reproduced by Cengage Learning EMEA Limited with the
permission of the IFRS Foundation.
No permission granted to third parties to reproduce or distribute. For full access to
IFRS Standards and the work of the IFRS Foundation please visit http://eifrs.ifrs.org
The authors and publishers wish to thank the organizations who have kindly given
permission for the use of their Annual Reports and Accounts, specifically Unilever,
Walt Disney and adidas.
ACKNOWLEDGEMENTS
We are grateful for constructive help and support from several quarters. Our family
members have coped with the conflicting demands on our time and thoughts. Now,
perhaps, it is your turn to help us, or to help us to help you. Suggestions for further
development and improvement would be gratefully received by authors or publisher.
Finally, to come back to where we started, we hope that you, the reader, will be
interested and stimulated. The internationalization of accounting is an unstoppable
force which will create new and demanding challenges. We believe that participation
in this process will be a fascinating and rewarding experience. We hope you will agree
when you have finished studying this book.
David Alexander, University of Birmingham
Ann Jorissen, University of Antwerp
Martin Hoogendoorn, Erasmus University Rotterdam
Carien van Mourik, Open University
Collette Kirwan, Waterford Institute of Technology
xvii
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PART ONE
FRAMEWORK, THEORY
AND REGULATION
This first Part is meant to help you structure your thinking about general purpose financial
reporting in an international context. We hope this will help you better grasp the technical
aspects of preparing financial statements in Part Two, consolidated financial statements in
Part Three and the interpretation of financial statements in Part Four. At the same time,
we hope that it will also stimulate you to develop the ability to think critically about the
theories, approaches and techniques you will encounter throughout the book.
1
If you are new to studying accounting, you are likely to find the current level
of integration in international financial and capital markets perfectly normal. The
International Accounting Standards Board (the Board) and its International Financial
Reporting Standards (IFRS Standards) have been around for some 15 years. Chapter 1
will explain what we mean by international financial reporting, what financial reporting
standards and IFRS Standards are meant to achieve, who uses general purpose financial
reporting information, and the main challenges for IFRS Standards.
Although international trade dates back as long as there have been nation states,
and international investment was quite common in the late nineteenth century, there
was great international diversity of accounting practices and standards. Chapter 2
discusses international accounting differences in the past as well as the present.
Before IFRS Standards, multinational companies seeking to raise financing needed to
communicate information about their financial performance and financial position to
investors in ways that they could understand. Conversely, investors wanting to invest
in companies in other countries had to make an effort to understand the information
in the financial statements of such companies.
During the 1980s, the globalization of financial, capital and product markets
progressed at an unprecedented rate, as did the harmonization of financial reporting
practices. Chapter 3 will consider the rise of the IASC and later the Board and the
development of international financial accounting standards going hand in hand
with the deregulation of financial and capital markets in most economically advanced
countries. As the IASC was a private organization claiming to serve the public interest,
it needed to have a conceptual framework that could lend it intellectual credibility
and its international accounting standards intellectual legitimacy. Chapter 4 will
discuss the history and development of the IASB® Conceptual Framework as well as
its structure and content. The IASB Conceptual Framework defines the objective of
general purpose financial reporting and sets out how to define, recognize, measure,
present and disclose the elements of financial statements so as to achieve this objective.
Chapter 4 therefore also discusses accounting theory and points to theories that are
relevant to the IASB Conceptual Framework and IFRS Standards today.
As the determination of income and equity (financial performance and financial
position) are important purposes of financial accounting, it is necessary to understand
the main perspectives on income and equity, and how they impact the IASB
Conceptual Framework and IFRS Standards today. Chapter 5 discusses the traditional
accounting and economic perspectives on income and equity, and Chapters 6 and 7
talk about the theoretical approaches that have developed as compromises between
the economic and accounting perspectives. Defining, recognizing and measuring
financial statement elements is complemented by the different perspectives on
presenting and disclosing the elements on the face of the financial statements or in the
notes. Chapter 8 introduces the presentation and disclosure of financial statements in
accordance with IAS 1 and the EU Directives.
IFRS Standards apply to companies, predominantly those whose securities are listed
on a stock exchange. Financial reporting for companies is one means of alleviating
the principal-agent problem and reducing the cost of the information asymmetry
between managers and shareholders. Chapter 9 introduces corporate governance
as the system by which a company is administered to achieve the objectives of the
company in the interests of its shareholders and balance their interests with those of
the other stakeholders in the company. Because there are many different stakeholders
who are affected by the company’s actions, it is not possible to encompass all
these conflicting interests and relations in law. Chapter 10 discusses business ethics
and corporate social responsibility (CSR) and CSR reporting, and how socially
responsible investors use CSR reports to inform their investment decisions. It is clear
that accounting is very much about conflicting interests, and professionally qualified
accountants have a responsibility for the public interest. In Chapter 11 you will
learn about the ethics of the accounting profession. On the one hand, professionally
qualified accountants are meant to serve the public interest, but on the other, they
have to satisfy their customers’ needs. This causes a conflict of interest between the
customer, the accountant, the accountant’s employer and the general public that
may never be satisfactorily resolved by a code of ethics and a commitment to public
interest. But accountants must try if they are to survive and thrive as a profession.
Another random document with
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The Project Gutenberg eBook of Leaves from
a middy's log
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eBook.
Title: Leaves from a middy's log
Author: Arthur Lee Knight
Release date: September 28, 2023 [eBook #71750]
Language: English
Original publication: London: Thomas Nelson and Sons, 1896
Credits: Bob Taylor, hekula03 and the Online Distributed

Proofreading Team at https://www.pgdp.net (This book
was produced from images made available by the
HathiTrust Digital Library.)
*** START OF THE PROJECT GUTENBERG EBOOK LEAVES

FROM A MIDDY'S LOG ***
LEAVES FROM A MIDDY’S
LOG.
“In an agony of apprehension I knelt down at Charlie’s side.”
Page 33.
T. NELSON & SONS.
Leaves from a
Middy’s Log
BY
ARTHUR LEE KNIGHT

Author of “Adventures of a Midshipmite,” “The Rajah of Monkey Island,”
“The Cruise of the ‘Cormorant’.”
&c. &c.
THOMAS NELSON AND SONS

London, Edinburgh, and New York
1896
CONTENTS.
I. A STRANGE ADVENTURE, 9
II. WE STORM THE FORT, 26
III. A FIGHT FOR LIFE, 37
IV. WE RETURN ON BOARD, 43
V. THE NAVAL BRIGADE LANDS, 55
VI. “COLD PIG” AND “SLING THE MONKEY,” 62
VII. NED AND THE MULE-DRIVER, 68
VIII. “PREPARE FOR CAVALRY!” 78
IX. WE HEAR STRANGE NEWS, 86
X. A PERILOUS ADVENTURE, 96
XI. JIM BEDDOES’ YARN, 111
XII. TAKEN PRISONER, 124
XIII. NED IS FLOGGED, 137
XIV. IN THE PIRATES’ CAVERN, 146
XV. A MARCH TO THE COAST, 162
XVI. IN IRONS, 172
XVII. ON BOARD THE PIRATE BRIG, 177
XVIII. THE PIRATES’ ISLAND, 193
XIX. IN THE CRATER CAVE, 211
XX. THE ESCAPE FROM THE CAVE, 222
XXI. HUNTED BY BLOODHOUNDS, 236
XXII. A FIGHT WITH A BLOODHOUND, 244
XXIII. A RACE FOR LIFE, 255
XXIV. DEATH OF MIGUEL, 263
XXV. WE ESCAPE TO SEA, 271
XXVI. CONCLUSION, 279
LEAVES FROM A MIDDY’S LOG.
CHAPTER I.
A STRANGE ADVENTURE.
A T the time when the adventures which I am about to relate took

place, I, Jack Darcy, was serving as a midshipman on board
H.M.S. Rattler, a smart frigate of fifty guns, commanded by Captain
Graves, who was a very distinguished officer and much beloved by
all who served under him. Our vessel was attached to the North
American squadron, and consequently we often visited the West
Indies and cruised in the Caribbean Sea. On this particular occasion
we were lying at anchor in the commodious harbour of Havana, the
capital of the beautiful and fertile island of Cuba, which its Spanish
masters delight to call “the pearl of the Antilles.”
A few days after we had come to anchor in the harbour, I, in
company with some of my brother-middies, obtained leave to go
ashore and have a look at the city and its Spanish and Creole
inhabitants. As the reader may suppose, we found plenty to interest
and amuse us. The afternoon, however, turned out so hot that we
made up our minds to return on board the ship earlier than we had
intended; and with this in view, we sauntered down to the wharf
under a burning tropical sun to seek for a shore-boat. In a few
minutes, the placid waters of the harbour, glowing like molten gold
under the fierce rays of an almost vertical sun, opened out before us,
crowded with shipping of various nationalities, amid which our own
beautiful, shapely frigate was clearly discernible with her lofty
tapering spars and shining black hull, the latter relieved by the broad
white streak across the portholes, from which the open-mouthed
guns frowned menacingly.
“I say, Jack,” exclaimed one of my messmates, Charlie Balfour, as
we were steering our way through the piles of merchandise that lay
strewn on the wharves, “that looks uncommonly like the officers’
recall flying at the Rattler’s masthead. What can the meaning of it
be?”
We glanced in the direction of our ship, and sure enough there
flew the recall as a signal for every officer to return on board without
delay.
As we gazed a flash issued from one of the forecastle ports, and
the sullen boom of a signal-gun reverberated over the harbour and
died away in multitudinous echoes amongst the hills behind the city.
“Perhaps the flagship is coming in,” I suggested.
“Impossible, my dear fellow,” answered Charlie, who was a
particular friend of mine; “the admiral was at Halifax by last advices,
and was likely to remain there.”
“We shall soon solve the mystery, anyhow,” I answered, pointing
across the harbour, “for here comes my boat, the second cutter.”
A few minutes later, the craft in question glided alongside the
wharf, cleverly steered by Ned Burton, the coxswain.
“What’s up now, Ned?” we shouted in chorus; “why has the first
lieutenant hoisted the recall?”
The coxswain touched his hat as he answered, “There is a high
old row up somewhere along the coast, gentlemen; and the long and
the short of it is that the captain has ordered us round to Santiago—
leastways that’s the yarn upon the lower deck.”
At this moment a group of our wardroom officers hurried down to
the landing-stage, and we all sprang into the cutter, which was at
once pushed off into deep water and headed for the ship. The ten
lusty oarsmen gave way with a will, and sent the boat spinning along
at an exhilarating pace, whilst Ned Burton carefully steered her
through the maze of merchant shipping and fishing-craft that
thronged the harbour. In a quarter of an hour we were alongside the
Rattler, and found every one full of excitement, and a general
preparation for weighing anchor going forward.
It seemed that the crew of an English merchant vessel, more than
half of whom were foreigners, had mutinied upon the high seas, and
after murdering the captain and the first mate, and pitching their
bodies overboard, had taken charge of the ship, which had a very
valuable general cargo. They had run her into the harbour of
Santiago de Cuba, where, owing to the disturbed state of the island,
they imagined that they could perhaps dispose of the cargo, and
then either burn the ship and join the insurgents, or put to sea again
and trust to the hazardous chance of not falling in with an English
cruiser.
Fortunately, however, their diabolical schemes were nipped in the
bud by the successful escape of Mr. Osborne, the surgeon of the
vessel, whom the mutineers had kept in close confinement lest they
should require his services. On the arrival of the ship at Santiago,
the leading desperadoes went on shore to try to dispose of the
cargo. During their absence, the surgeon managed to give the others
the slip, and with considerable pluck swam to a small coasting-
steamer which was anchored not far off. The skipper of this craft had
easily been prevailed upon to steam off at once for Havana on the
promise of a reward; and to the surgeon’s delight he was soon en
route for the capital. On arriving at Havana, he at once reported
himself to Captain Graves, who paid the skipper of the steamer
handsomely for his co-operation; and after consulting with the
Captain-General of Cuba, he ordered the Rattler to hold herself in
readiness to proceed to Santiago.
As the sun sank to rest in a blaze of crimson glory which was
reflected in ruddy hues on city and shipping, and on the tranquil
waters of the harbour, we tripped our anchor and steamed slowly out
to sea. At the same time, the innumerable bells of Havana rang out
their confused and jangling summons to vespers from the church
and convent towers, their tones mellowed by distance as they came
sounding over the expansive bay. They seemed to be ringing out a
farewell to us as we faded from view in the short evanescent twilight,
which still glowed with some of the sunset’s rapidly-dissolving
glories.
We middies were of course full of excitement at the idea of fresh
adventures, and were burning to know what plans the captain had
laid for capturing this daring band of mutineers, who had had the
effrontery to murder their officers and seize the vessel on the high
seas.
It soon became known that Captain Graves designed to capture
these villains by means of a little strategy. He intended to enter
Santiago de Cuba under easy steam, after nightfall, so as not to
arouse suspicion on board the craft which had been thus cleverly
seized, and which was called the Flying-fish. It would then perhaps
be possible to seize the crew in their hammocks before any
resistance could be offered. Mr. Osborne, who accompanied us,
gave it as his opinion that, on learning of his escape, the mutineers
would probably be seized with alarm, and betake themselves
elsewhere. It was highly improbable, indeed, that they could know of
the presence of a British man-of-war in Cuban waters; but still they
would not unnaturally conjecture that some Spanish gunboats might
be sent in chase of them, as soon as the facts of the mutiny and
murders reached the ears of the Captain-General at Havana.
Fortunately for our scheme, there was no moon, though the stars
shone down with the sparkling brilliancy so remarkable in tropical
climes. The night, however, was sufficiently dark for our purpose;
and toward the end of the middle watch, the Rattler, like a giant
phantom-ship, glided almost imperceptibly into Santiago harbour,
with forecastlemen stationed at the small bower anchor, and armed
boats’ crews ready to go on any service at a moment’s notice.
The captain knew the Santiago de Cuba anchorage well, besides
being provided with excellent charts; so the frigate was taken in at
the dead of night without the slightest hesitation. Mr. Osborne
declared that he distinguished the Flying-fish in about the same
position in which he had left her; consequently we anchored as
quietly as possible a few lengths distant from her, and at once
proceeded to put our plan into execution.
The second cutter, the boat of which I was midshipman, was one
of those told off for the enterprise, so I hurriedly got my side-arms,
and mustered my crew preparatory to manning the boat. Mr. Giles,
the master-at-arms, supported by some ship’s corporals and
marines, was to go with me, taking handcuffs with him. Mr.
Thompson, the gunnery lieutenant, was to command the party, and,
in company with Mr. Osborne—who had provided himself with a
revolver—was to go in the first cutter with my chum, Charlie Balfour.
These two boats the captain considered quite sufficient for the duty,
especially as a complete surprise was intended, and it was known
that the mutineers were very imperfectly supplied with arms.
With muffled oars, and long steady strokes, we pulled away over
the star-begemmed waters for the long low vessel, which with her
clear-cut spars and rigging, and somewhat rakish appearance, more
nearly resembled a pirate than a peaceful merchantman.
All seemed silent as death. Not a voice broke the stillness that
reigned fore-and-aft. The crew were apparently wrapped in slumber.
The first cutter hooked on at the vessel’s starboard gangway,
whilst we made fast to port, and quickly scrambled on board. The
deck was deserted, and a deathlike stillness reigned throughout the
ship.
I met Mr. Thompson and his party at the main-hatchway, and we
proceeded to light some dark lanterns we had brought with us, and
get our revolvers ready for use.
“Mr. Osborne has sprained his ankle in getting out of the boat,”
whispered the gunnery lieutenant, “and he is in such pain that we left
him in the cutter in charge of the bowmen. We can manage all right
without him. Have you got the handcuffs ready, Mr. Giles?”
“All right, sir,” replied that officer in the same undertone, and he
held up to view the instruments in question, and chuckled audibly.
“Now, men, keep perfect silence,” continued Mr. Thompson, “and
we’ll surprise these fellows in their berths, and bundle them into the
boats before they can say ‘Jack Robinson.’ Follow me down the
main hatchway, and in the first place we’ll overhaul the cabins, for it’s
there the rascals are sleeping, I expect.”
With cautious and stealthy steps—having divested ourselves of
our shoes—we followed our leader below. At this moment we almost
betrayed ourselves through a clumsy marine knocking his head
against the ship’s bell, which hung at the foot of the ladder, and gave
out a metallic ring that could have been distinctly heard by any
wakeful person on the main-deck or in the cabins.
“Confound that bullet-headed lobster!” whispered Mr. Thompson
fiercely. “I’ll crack his skull in earnest for him if he doesn’t look out.”
The man, who had overheard this remark, and was ruefully
rubbing his head, slunk to the rear, and sheltered himself behind the
stalwart form of the master-at-arms.
“There are several men asleep in hammocks,” continued the
gunnery lieutenant, flashing his lantern as he spoke on the after part
of the deck.—“Mr. Darcy, you must take some of your crew and seize
the men that are in them. One of the corporals will go with you, and
two marines to handcuff them. I’ll push on with Mr. Balfour and
capture the mutineers that may be in the stateroom and the cabins,
and you can join me there as soon as possible.”
With a rush Ned Burton and my cutter’s crew surrounded the
unconscious sleepers, and hauled them with little ceremony out of
their hammocks; and thus before the men could recover from their
surprise, they were cleverly thrown down and handcuffed. Being half
dressed, they were all ready to be taken on board the Rattler; and I
was on the point of leaving them in charge of the marines, and
pushing on after Mr. Thompson, when one of them, who appeared
from his accent to be an American, broke out with an angry demand
as to the reason why he and his comrades had been taken
prisoners. I answered laconically that it was for murder and piracy
upon the high seas; and without paying any attention to a furious
rejoinder made by the fellow—who had a very unprepossessing
appearance—I hurried aft with Ned Burton and the rest of the blue-
jackets.
Having pushed open a door, I found myself in a very elegant
stateroom dimly lighted by two swinging lamps, which hung over a
table covered with the débris of what had apparently been a
sumptuous meal. Decanters and glasses sparkled in the rich dim
light, and fruit and sweetmeats were scattered about in profusion
over a snowy cloth of remarkably fine linen. Casting a hurried glance
around, I saw that the stateroom was handsomely and even
luxuriously furnished; everywhere signs of elegant taste were visible.
The bulkheads were painted grey and gold, and had a handsome
moulding running around them. The ports were draped with dainty
curtains, and pictures were suspended in every available space. A
rich carpet covered the deck, and was dotted with gipsy tables
covered with fancy china, stands for photographs, bowls of flowers,
and bric-à-brac.
“A curious place for mutineers this,” said I audibly, not a little
surprised at what I saw before me.
“Ay, they live like fighting-cocks, sir, there’s no question about that,
and they seem to have had a good tuck-in last night,” observed my
coxswain in a jocular tone. “Perhaps the gunnery lootenant will let us
finish up the scraps by-and-by.”
I was on the point of replying to Ned Burton, when a tremendous
hubbub and uproar commenced in the after-cabins opening from the
stateroom, to which Mr. Thompson had evidently penetrated with his
men. Angry shouts and furious oaths were heard, followed by the
sound of blows, the crashing of glass and furniture, and, more
appalling than anything else, the shrill screams of frightened women.
Recovering from our surprise, we were on the point of rushing to
our chief’s aid, when to our dismay the doors were burst open, and
the lieutenant and his men, with horror-struck countenances,
tumbled pell-mell into the stateroom, closely followed by a number of
excited-looking individuals arrayed only in their nightshirts, and
wielding chairs, walking-sticks, and any weapons that had come
conveniently to hand. In the distance, we caught a hasty glance of
two female forms retiring to the recesses of their sleeping-cabins.
From the hurried glance I had at their faces, they seemed pale with
alarm and dissolved in tears.
Directly my eye rested on the men who were following our party
out, I saw that some egregious mistake had been made; for they
were gentlemanly and superior-looking men, and were evidently as
much astonished at our appearance as we were at theirs.
Mr. Thompson immediately recovered his self-possession, and
ordered all the blue-jackets to leave the cabin, and wait for him
outside. He then advanced with every mark of concern to the man
who appeared to be the captain of the vessel, and offered the most
profuse apologies for the extraordinary blunder that had been made.
“As you can see, sir, by our uniforms,” he began, “we are British
naval officers. Acting on information which we had every reason to
believe genuine, we boarded your ship, imagining her to be an
English merchant vessel brought in here a few days ago by a
mutinous crew who had murdered their captain and the chief officer.
I can only say that I regret exceedingly the inconvenience and
annoyance you have been put to, and you must convey our most
heartfelt apologies to the ladies, who, I trust, will be none the worse
for their fright. Captain Graves will himself come on board and
personally make his excuses to-morrow; and of course any damage
that has been done will be paid for by our Government.”
The American captain—for such he was—could not forbear
smiling as he listened to Mr. Thompson’s narration.
“Stranger, I forgive you for this night’s work,” said he, “though I
must say it is rather uncomfortable to be roused out of a deep sleep
and arrested by a lot of fire-eaters like you and your men. I calculate
if the President heard of it, there’d be some dispatches passing
between the White House and St. James’s that wouldn’t be quite civil
in tone.”
Mr. Thompson again tendered his excuses, and prepared to
withdraw; but the American skipper and his friends, who had hastily
arrayed themselves in dressing-gowns, insisted on our taking a glass
of wine with them to show there was no ill-feeling, which we did,
though the gunnery lieutenant, I could see, was burning to retire from
a scene in which he had played so ridiculous a part.
“I calculate I can give you a hint as to the craft you’re looking for,”
remarked the skipper, as he quaffed his wine. “If I’m not mistaken,
she left this anchorage yesterday morning and steered in a southerly
direction. She is uncommonly like us in build, and much the same rig
aloft, but I’d lay a wager of a thousand dollars we could knock her
into fits, either running on a wind or close-hauled. If you capture her,
lieutenant, just bring the old hooker in here and we’ll have a racing
match.”
Mr. Thompson smiled and said he’d see about it, and we then
made our adieus and retired.
“Now, Mr. Darcy,” exclaimed my superior, as soon as we were out
of earshot, “what shall we do to that rascal Osborne, who misled us
so? I vote we string him up to the mainyard-arm as a terrible warning
to other crack-brained medicos. By the powers, there might have
been a pretty kettle of fish to fry if those Americans hadn’t turned up
trumps. I was just on the point of spitting that skipper on the end of
my sword when the fray began, and it was only when the master-at-
arms rushed into the cabin of one of the ladies, with a couple of
marines, and the handcuffs ready for slipping on, that her loud
shrieks proved to me that there was something wrong. The whole lot
of them then turned out, women and all, and attacked us like a lot of
furies. I believe one of my little fingers is broken.”
We found that Mr. Osborne had been conveyed on board the
Rattler again, so for the present he escaped the storm of resentment
that was brewing in the gallant gunnery lieutenant’s breast.
As I passed under the merchantman’s stern on the way back, I
deciphered her name by the aid of a lantern, and read, “Snapping
Turtle, of Boston;” so there was no doubt about her nationality.
Ned Burton told me that the Yankee sailors had been in an
ungovernable rage till Mr. Giles had come out and released them.
Even then they had poured out volleys of invective, and threats of
what their Government would do to avenge the insult they had
received. At last Ned, stung by their remarks, offered to fight the
biggest man amongst them with his fists. This offer they declined,
and immediately grew more amicable, exchanging tobacco and
compliments before our blue-jackets were ordered off to man the
boats.
So ended a truly ludicrous adventure, in which we all cut a sorry
figure, and from which we retired, as it were, with our tails between
our legs.
Long and loud were the peals of laughter that greeted us when we
regained the Rattler’s quarter-deck, where we found most of the

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