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Chapter 7 - Consolidated Financial Statements - Ownership Patterns And Income Taxes
CHAPTER 7
CONSOLIDATED FINANCIAL STATEMENTS - OWNERSHIP
PATTERNS AND INCOME TAXES
Chapter Outline
I. Indirect subsidiary control
A. Control of subsidiary companies within a business combination is often of an indirect
nature; one subsidiary possesses the stock of another rather than the parent having
direct ownership.
1. These ownership patterns may be developed specifically to enhance control or for
organizational purposes.
2. Such ownership patterns may also result from the parent company's acquisition of a
company that already possesses subsidiaries.
B. One of the most common corporate structures is the father-son-grandson configuration
where each subsidiary in turn owns one or more subsidiaries.
C. The consolidation process is altered somewhat when indirect control is present.
1. The worksheet entries are effectively doubled by each corporate ownership layer but
the concepts underlying the consolidation process are not changed.
2. Calculation of the accrual-based income of a subsidiary recognizing the consolidated
relationships is an important step in an indirect ownership structure.
a. The determination of accrual-based income figures is needed for equity income
accruals as well as for the computation of noncontrolling interest balances.
b. Any company within the business combination that is in both a parent and a
subsidiary position must recognize the equity income accruing from its subsidiary
before computing its own income.
II. Indirect subsidiary control-connecting affiliation

A. A connecting affiliation exists whenever two or more companies within a business
combination hold an equity interest in another member of that organization.
B. Despite this variation in the standard ownership pattern, the consolidation process is
essentially the same for a connecting affiliation as for a father-son-grandson
organization.
C. Once again, any company in both a parent and a subsidiary position must recognize an
appropriate equity accrual in computing its own income.
III. Mutual ownership

A. A mutual affiliation exists whenever a subsidiary owns shares of its parent company.
B. Parent shares being held by a subsidiary are accounted for by the treasury stock
approach.
1. The cost paid to acquire the parent's stock is reclassified within the consolidation
process to a treasury stock account and no income is accrued.
7-1
2. The treasury stock approach is popular in practice because of its simplicity and is now
required by the FASB Codification.
IV. Income tax accounting for a business combination—consolidated tax returns

A. A consolidated tax return can be prepared for all companies comprising an affiliated group.
Any other companies within the business combination file separate tax returns.
B. A domestic corporation may be included in an affiliated group if the parent company (either
directly or indirectly) owns at least 80 percent of the voting stock of the subsidiary as well
as 80 percent of each class of its nonvoting stock.
C. The filing of a consolidated tax return provides several potential advantages to the
members of an affiliated group.
1. Intra-entity profits are not taxed until realized.
2. Intra-entity dividends are not taxed (although these distributions are nontaxable for all
members of an affiliated group whether a consolidated return or a separate return is
filed).
3. Losses of one affiliate can be used to reduce the taxable income earned by other
members of the group.
D. Income tax expense—effect on noncontrolling interest valuation
1. If a consolidated tax return is filed, an allocation of the total expense must be made to
each of the component companies to arrive at the realized income figures that serve
as a basis for noncontrolling interest computations.
2. Income tax expense is frequently assigned to each subsidiary based on the amounts
that would have been paid on separate returns.
V. Income tax accounting for a business combination—separate tax returns

A. Members of a business combination that are foreign companies or that do not meet the 80
percent ownership rule (as described above) must file separate income tax returns.
B. Companies in an affiliated group can elect to file separate tax returns. Deferred income
taxes are often recognized when separate returns are filed due to temporary differences
stemming from unrealized gains and losses as well as intra-entity dividends.
VI. Temporary tax differences can stem from the creation of a business combination
A. The tax basis of a subsidiary's assets and liabilities may differ from their consolidated
values (which is based on the fair market value on the date the combination is created).
B. If additional taxes will result in future years (for example, it the tax basis of an asset is
lower than its consolidated value so that future depreciation expense for tax purposes will
be less), a deferred tax liability is created by a combination.
C. The deferred tax liability is then written off (creating a reduction in tax expense) in future
years so that the net expense recognized (a lower number) matches the combination's
book income (a lower number due to the extra depreciation of the consolidated value).
Vll. Operating loss carryforwards

A. Net operating losses recognized by a company can be used to reduce taxable income
from the previous two years (a carryback) or for the future 20 years (a carryforward).
7-2
B. If one company in a newly created combination has a tax carryforward, the future tax
benefits are recognized as a deferred income tax asset.
C. However, a valuation allowance must also be recorded to reduce the deferred tax asset to
the amount that is more likely than not to be realized.
Answers to Questions
1. A father-son-grandson relationship is a specific type of ownership configuration often

encountered in business combinations. The parent possesses the stock of one or more
companies. At least one of these subsidiaries holds a majority of the voting stock of its own
subsidiary. Each subsidiary controls other subsidiaries with the chain of ownership going on
indefinitely. The parent actually holds control over all of the companies within the business
combination despite having direct ownership in only its own subsidiaries.
2. In a business combination having an indirect ownership pattern, at least one company is in

both a parent and a subsidiary position. To calculate the accrual-based income earned by that
company, a proper recognition of the equity income accruing from its own subsidiary must
initially be made. Structuring the income calculation in this manner is necessary to ensure that
all earnings are properly included by each company.
3. Able—100% of income accrues to the consolidated entity (as parent company).

Baker—70% (percentage of stock owned by Able).
Carter—56% (80% of stock owned by Baker multiplied by the 70% of Baker controlled by
Able).
Dexter—33.6% (60% of stock owned by Carter multiplied by the 80% of Carter controlled by
Baker multiplied by the 70% of Baker owned by Able).
4. When an indirect ownership is present, the quantity of consolidation entries will increase,
perhaps significantly. An additional set of entries is included on the worksheet for each
separate investment. Furthermore, the determination of realized income figures for each
subsidiary must be computed in a precise manner. For any company in both a parent and a
subsidiary position, equity income accruals are recognized prior to the calculation of that
company's realized income. This realized income total is significant because it serves as the
basis for noncontrolling interest calculations as well as the equity accruals to be recognized by
that company's parent.
5. In a connecting affiliation, two (or more) companies within a business combination own shares
in a third member. A mutual ownership, in contrast, exists whenever a subsidiary possesses
an equity interest in its own parent.
6. In accounting for a mutual ownership, SFAS 160 requires the treasury stock approach. The
treasury stock approach presumes that the cost of the parent shares should be reclassified as
treasury stock within the consolidation process. The subsidiary is being viewed, under this
method, as an agent of the parent. Thus, the shares are accounted for as if the parent had
actually made the acquisition.
7-3
7. According to present tax laws, an affiliated group can be comprised of all domestic
corporations in which a parent holds 80 percent ownership. More specifically, the parent must
8. own (directly or indirectly) 80 percent of the voting stock of the corporation as well as at least
80 percent of each class of nonvoting stock.
9. Several basic advantages are available to combinations that file a consolidated tax return.
First, intra-entity profits are not taxed until realized. For companies with large amounts of intra-
entity transactions, the deferral of unrealized gains causes a delay in the making of significant
tax payments. Second, losses incurred by one company can be used to reduce or offset
taxable income earned by other members of the affiliated group. In addition, intra-entity
dividends are not taxable but that exclusion applies to the members of an affiliated group
regardless of whether a consolidated or separate tax return is filed.
Members of a business combination may be forced to file separate tax returns. Foreign
corporations, for example, must always file separately. Domestic companies that do not meet
the 80 percent ownership rule are also required to file in this manner. Furthermore, companies
that are in an affiliated group may still elect to file separately. If all companies within the
combination are profitable and few intra-entity transactions are carried out, little advantage
may accrue from preparing a consolidated return. With a separate filing, a subsidiary has
more flexibility as to accounting methods as well as its choice of a fiscal year-end.
10. The allocation of income tax expense among the component companies of a business
combination has a direct bearing on realized income totals and, therefore, noncontrolling
interest calculations. Obviously, the more expense that is assigned to a particular company
the less realized income is attributed to that concern. Income tax expense can be allocated
based on the income totals that would have been reported by various companies if separate
tax returns had been filed or on the portion of taxable income derived from each company.
11. In filing a separate tax return (assuming that the two companies do not qualify as members of
an affiliated group), the parent must include as income the dividends received from the
subsidiary. For financial reporting purposes, however, income is accrued based on the
ownership percentage of the realized income of the subsidiary. Because income is frequently
recognized by the parent prior to being received in the form of dividends (when it is subject to
taxation), deferred income taxes must be recognized.
Either the parent or the subsidiary might also have to record deferred income taxes in
connection with any unrealized intra-entity gain. On a separate tax return, such gains are
reported at the time of transfer while for financial reporting purposes they are appropriately
deferred until realized. Once again, a temporary difference is created which necessitates the
recognition of deferred income taxes.
12. If the consolidated value of a subsidiary’s assets exceeds their tax basis, depreciation
expense in the future will be less on the tax return than is shown for external reporting
purposes. The reduced expense creates higher taxable income and, thus, increases taxes.
Therefore, the difference in values dictates an anticipated increase in future tax payments.
This deferred liability is recognized at the time the combination is created. Subsequently,
7-4
when actual tax payments do arise, the deferred liability is written off rather than recognizing
expense based solely on the current liability. In this manner, the expense is shown at a lower
figure, one that is matched with reported income (which is also a lower balance because of
the extra depreciation).
Recognition of this deferred liability at date of acquisition also reduces the net amount
attributed to the subsidiary's assets and liabilities in the initial allocation process. Therefore,
the residual asset (goodwill) is increased by the amount of any liability that must be
recognized.
13. A net operating loss carryforward allows the company to reduce taxable income for up to 20
years into the future. Thus, a benefit may possibly be derived from the carryforward but that
benefit is based on Wilson (the subsidiary) being able to generate taxable income to be
decreased by the carryforward. To reflect the potential tax reduction, a deferred income tax
asset is recorded for the total amount of anticipated benefit. However, because of the
uncertainty, unless the receipt of this benefit is more likely than not to be received, a valuation
allowance must also be recorded as a contra account to the asset. The valuation allowance
may be for the entire amount or just for a portion of the asset.
14. At the date of acquisition, the valuation allowance was $150,000. As a contra asset account,
recognition of this amount reduced the net assets attributed to the subsidiary and, hence,
increased the recording of goodwill (assuming that the price did not indicate a bargain
purchase). If the valuation allowance is subsequently reduced to $110,000, the net assets
have increased by $40,000. This change is reflected by a decrease in income tax expense.
Answers to Problems
1. D
2. B
3. D
4. C
5. C
6. C
7. A Damson's accrual-based income:

Operational income ................................................................... $200,000
Defer unrealized gain ................................................................ (40,000)
Damson's accrual-based income ....................................... $160,000
Crimson's accrual-based income:

Investment Income (90% of Damson’s realized income) ....... 144,000
Crimson's accrual-based income ....................................... $344,000
7-5
Bassett's accrual-based income:

Investment income (80% of Crimson's realized income) ....... 275,200
Bassett's accrual-based income ........................................ $575,200
8. C Icede's accrual-based income:

Icede's accrual-based income ............................................ $160,000
Outside ownership .................................................................... 20%
Noncontrolling interest ....................................................... $32,000
Healthstone's accrual-based income:

Investment income (80% of Icede's accrual-based income) . 128,000
Healthstone's accrual-based income ................................. $398,000
Outside ownership .................................................................... 20%
Noncontrolling interest ....................................................... $79,600
Total noncontrolling interest = ($32,000 + $79,600) = $111,600
9. D Juvyn's operational income .......................................................... $50,000

Dividend income ............................................................................. 14,000
Juvyn's income ............................................................................... $64,000
Outside ownership ......................................................................... 10%
Noncontrolling interest .................................................................. $6,400
10. A Equity income (60% of $200,000) .................................................. $120,000

Dividend income (60% of $40,000) ................................................ 24,000
Tax difference ............................................................................ $96,000
Dividend deduction upon eventual distribution (80%) ................ (76,800)
Temporary portion of tax difference ........................................ $19,200
Tax rate .......................................................................................... 30%
Deferred income tax liability .................................................... $5,760
11. C Unrealized Gain:

Total gain ..................................................................................... $30,000
Portion still held .......................................................................... 20%
Unrealized gain .......................................................................... $6,000
Tax rate .......................................................................................... 25%
Deferred tax asset ....................................................................... $1,500
7-6
12. A Recognition of this gain is not required on a consolidated tax return.
13. C Because fair value of the subsidiary's assets exceeds the tax basis by
$100,000 a deferred tax liability of $30,000 (30%) must be recorded. Goodwill
is then computed as follows:
Consideration transferred ....................................... $420,000

Fair value ............................................................... $400,000
Deferred tax liability ................................................. (30,000) 370,000
Goodwill .................................................................... $50,000
14. (35 Minutes) (Series of reporting and consolidation questions pertaining to a

father-son-grandson combination. Includes unrealized inventory gains)
a. Consideration transferred (by Tree) ............................. $252,000
Noncontrolling interest fair value ................................. 108,000
Limb’s business fair value ............................................. 360,000
Book value ............................................................... (300,000)
Trade name ...................................................................... $60,000
Life .................................................................................. 30 years
Annual amortization ...................................................... $2,000
14. (continued)
Consideration transferred for Leaf (by Limb) .............. $91,000
Leaf’s business fair value ............................................. $130,000
Book value ............................................................... (100,000)
Trade name ...................................................................... $30,000
Life .................................................................................. 30 years
Annual amortization ...................................................... $1,000
a. Investment in Limb $252,000

Limb's reported income-2009 $40,000
Amortization expense (2,000)
Accrual-based income $38,000
Limb’s percentage ownership 70%
Equity accrual-2009 $26,600
Dividends received 2009 (7,000)
Limb's reported income-2010 $60,000
Amortization expense (2,000)
Income from Leaf 6,300
Limb’s percentage ownership 70%
Equity accrual-2010 $45,010
7-7
Dividends received 2010 (14,000)

Investment in Limb 12-31-10 $302,610
b. Leaf—2010 income (revenues minus expenses) $10,000

Amortization (1,000)
Limb's ownership percentage 70%
Equity income accrual $6,300
Income recognized ($2,000 dividends × 70%) (1,400)
Retained earnings increase (Limb), 1/1/11 $4,900
Limb—2009 operating income $40,000

Limb—2010 operating income 60,000
Amortization (2 years at $2,000 per year) (4,000)
Equity income from ownership of Leaf (above) 6,300
Total income for previous periods 102,300
Tree's ownership percentage 70%
Equity income accrual 71,610
Income recognized ($10,000 [2009] + $20,000 [2010]
dividends × 70% ownership) (21,000)
Retained earnings increase (Tree), 1/1/11 $50,610
15. (continued)
c. Consolidated sales (total for the companies) $1,260,000

Consolidated expenses (total for the companies) (1,025,000)
Total amortization expense (see a.) (3,000)
Consolidated net income for 2011 $232,000
d. Noncontrolling interest in income of Leaf

Revenues less expenses $30,000
Excess amortization (1,000)
Noncontrolling interest percentage 30%
Noncontrolling interest in income of Leaf $8,700
Noncontrolling interest in income of Limb:

Revenues less expenses $65,000
Equity in Leaf income [(30,000-1,000) × 70%] 20,300
Realized income of Limb—2011 $83,300
Outside ownership 30% $24,990
NCI share of consolidated income $33,690
7-8
e. 2010 Realized income of Limb (prior to accounting

for unrealized gains) (see a) $64,300
2009 Transfer-gain recognized in 2010 10,000
2010 Transfer-gain to be recognized in 2011 (16,000)
2010 Realized income Limb $58,300
2011 Realized income of Limb (prior to accounting

for unrealized gains) (see d.) $83,300
2010 Transfer-gain recognized in 2011 16,000
2011 Transfer-gain to be recognized in 2012 (25,000)
2011 Realized income—Limb $74,300
f. In b., an adjustment of $50,610 was made to the beginning 2011 retained

earnings. Question e. takes this same question and alters it by including
unrealized gains. The $10,000 gain does not affect the answer because the 2010
and 2011 effects cancel each other.
Thus, only the $16,000 gain must be taken into consideration on January 1,
2011. Limb’s realized income in 2010 is reduced by $16,000 because of the
deferred gain. The parent's equity accrual would be reduced by $11,200 or 70%
of that figure. The adjustment as of January 1, 2011 is $39,410 ($50,610 –
$11,200).
16. (15 minutes) (Income and noncontrolling interest with mutual ownership.)
a. Consideration transferred by Uncle ............................. $500,000

Nephew’s business fair value ....................................... $625,000
Book value ...................................................................... 600,000
Intangible assets ............................................................ $25,000
Life .................................................................................. 10 years
Amortization expense (annual) ..................................... $2,500
Income reported by Nephew—2011 .............................. $50,000

Amortization expense (above) ...................................... (2,500)
Accrual-based income.................................................... 47,500
Uncle's ownership percentage ..................................... 80%
Income of subsidiary recognized by Uncle ................. $38,000
b. To the outside owners, the $6,000 intra-entity dividends ($20,000 × 30%) paid by
Uncle are viewed as income because the book value of Nephew is increasing.
Thus, the noncontrolling interest's share of income is $10,700 or 20% of
[$47,500 income ($50,000 operational income less $2,500 excess amortization)
7-9
plus the $6,000 in dividends].
17. (35 Minutes) (Consolidated income for a father-son-grandson combination.)
a. Mesa's operating income $250,000

Butte's operating income 98,000
Valley's operating income 140,000
Amortization expense–Mesa's investment in Butte (22,500)
Amortization expense–Butte's investment in Valley (8,000)
Consolidated net income $457,500
b. Valley's operating income $140,000

Amortization expense (on Butte's investment) (8,000)
Valley's accrual-based income $132,000
Outside ownership 45%
Noncontrolling interest in Valley's income $59,400
Butte's operating income $ 98,000
Amortization expense (on Mesa's investment) (22,500)
Equity accrual from ownership of Valley
($132,000 × 55%) 72,600
Butte's accrual-based income $148,100
Noncontrolling interest in Butte's income $29,620
Total noncontrolling interest in income of subsidiaries $89,020
16. (Continued)
Mesa’s operating income $250,000

Mesa’s share of Butte’s operating income (80% × $98,000) 78,400
Mesa’s share of Valley’s operating income (80% × 55% × $140,000) 61,600
Mesa’s share of Butte’s excess amortization (80% × $22,500) (18,000)
Mesa’s share of Valley’s excess amortization (80% × 55% × $8,000) (3,520)
Controlling interest in consolidated net income $368,480
Noncontrolling interest in consolidated net income 89,020
Consolidated net income $457,500
17. (30 Minutes) (Consolidated income figures for a connecting affiliation)
UNREALIZED GAINS:
Cleveland ($12,000 remaining inventory × 25% markup) = $3,000
Wisconsin ($40,000 remaining inventory × 30% markup) = $12,000
NONCONTROLLING INTERESTS:
CLEVELAND:
7-10
Operational income (sales minus cost of goods sold and

expenses) .................................................................. $60,000
Defer unrealized gain (above) ....................................... (3,000)
Realized income—Cleveland ................................... $57,000
Outside ownership ......................................................... 20%
Noncontrolling interest in Cleveland's income ...... $11,400
WISCONSIN:
Operational income (sales minus cost of goods sold and
expenses) .................................................................. $110,000
Defer unrealized gain (above) ....................................... (12,000)
Investment income (60% of Cleveland's realized income of
$57,000) .................................................................... 34,200
Realized income—Wisconsin .................................. $132,200
Noncontrolling interest in Wisconsin's income ..... $13,220
TOTAL NONCONTROLLING INTERESTS: $24,620 ($11,400 + $13,220)
CONSOLIDATION TOTALS
▪ Sales = $1,590,000 (add the three book values and eliminate intra-entity
transfers of $40,000 and $100,000)
▪ Cost of goods sold = $1,015,000 (add the three book values, eliminate intra-
entity transfers of $40,000 and $100,000, and defer [add] unrealized gains of
$3,000 and $12,000)
17. (continued)
▪ Expenses = $200,000 (add the three book values)
▪ Dividend income = -0- (eliminated for consolidation purposes)
▪ Consolidated net income = $375,000 (consolidated revenues less
consolidated cost of goods sold and expenses)
▪ Noncontrolling interests in subsidiaries' income = $24,620 (computed above)
▪ Controlling interest in consolidated net income = $350,380 (consolidated net
income less noncontrolling interest share)
18. (12 Minutes) (Acquisition accounting for a subsidiary’s operating loss

carryforward)
a. Consideration transferred 1/1/11 $900,000

Fair value of identifiable assets acquired:
7-11
Software licensing agreements $750,000

Deferred tax asset from NOL (.35 × $120,000) 42,000
Fair value of net identifiable assets acquired 792,000
Goodwill $108,000
b. Consideration transferred 1/1/11 $900,000

Fair value of identifiable assets acquired:
Software licensing agreements $750,000
Deferred tax asset from NOL (.35 × $120,000) 42,000
Valuation allowance for NOL (42,000)
Fair value of net identifiable assets acquired 750,000
Goodwill $150,000
19. (25 Minutes) (Tax expense with separate tax returns for a combination.)
a. CONSOLIDATED TOTALS
▪ Sales = $790,000 (add the two book values and eliminate the $110,000 intra-
entity transfer)
▪ Cost of goods sold = $340,000 (add the book values, eliminate intra-entity
transfers of $110,000, recognize [subtract] $30,000 deferred gain from 2011,
and defer [add] $40,000 intra-entity gain into 2012)
▪ Operating expenses = $234,000 (add the two book values)
▪ Dividend income = -0- (eliminated for consolidation purposes)
▪ Consolidated net income = $216,000 (Revenues less expenses)
▪ Noncontrolling interest in Down's Income = $18,000 (20 percent of reported
Income of $100,000 plus $30,000 gain deferred from 2011 less $40,000 gain
deferred into 2012)
▪ Controlling interest in consolidated net income = $198,000
19. (continued)
b. On separate returns, the unrealized gains are reported as taxable income.

Because Up owns 80 percent of Down's stock, the dividends are tax- free and no
deferred tax liability is necessary on the undistributed income.
DUE TO GOVERNMENT: (separate returns)

UP:
Income (without dividend income) ............................... $126,000
Tax rate .......................................................................... 30%
Currently payable to government ........................... $37,800
DOWN:
Reported income ............................................................ $100,000
Tax rate .......................................................................... 30%
7-12
Currently payable to government ........................... $30,000
Total income tax payable: Current = $67,800 ($37,800 + $30,000)
CURRENT EXPENSE:
Consolidated net income (part a.) ........................... $198,000
Eliminate noncontrolling interest ............................ +18,000
Income to be taxed .............................................. $216,000
Tax rate .................................................................. 30%
Income tax expense ................................................. $64,800
The $3,000 difference between the liability and the expense is an increase in the
Deferred Income Tax Asset account. It is created by the tax effect (30%) on the
net unrealized gain for the period ($10,000 or $40,000 – $30,000).
20. (45 Minutes) (Series of questions requires computation of income tax expense
and the related payable balance)
a. $260,000 ($650,000 × 40%)

The affiliated group would be taxed on its operating income of $650,000 (the
net unrealized gain is deferred on a consolidated return). The intra-entity
income and dividends are not relevant since a consolidated return is filed.
b. $260,000 ($650,000 × 40%)

net unrealized gain is deferred on a consolidated return). The intra-entity
income and dividends are not relevant because a consolidated return is filed.
The percentage ownership does not affect the figures on a consolidated
return.
20. (continued)
c. $296,000 ($96,000 + $200,000)

Rogers would pay $96,000 or 40% of its $240,000 operating income. Clarke
would pay $200,000 or 40% of its $500,000 operating income. The unrealized
gain is not deferred when separate returns are filed. Intra-entity dividends are
not taxable because the parties qualify as an affiliated group even though
separate returns are being filed. Answer (c.) differs from (a.) and (b.) because
tax on the $90,000 unrealized gain (40% or $36,000) is paid immediately.
d. $268,064
Rogers would record income tax expense of $96,000 or 40% of its $240,000
operating income.
7-13
Clarke must record its expense based on the revenue recognized during the
period. Thus, the tax expense is based on operating income of $410,000 (the net
unrealized gain is not being recognized in this period) plus equity income
accruing from Rogers of $100,800 (70% of that company's after-tax income).
Clarke will record an income tax expense of $164,000 in connection with the
operating income ($410,000 × 40%). The expense recognized in connection with
the equity accrual is affected by the dividends-received deduction:
Equity income of subsidiary .......................................... $100,800

Dividends-received deduction (when received) (80%) 80,640
Income subject to taxation ............................................ $20,160
Tax rate .......................................................................... 40%
Income tax expense—equity income (Clarke) ............. $8,064
Income tax expense—operating income (Clarke)
(above) ....................................................................... 164,000 $172,064
Income tax expense—operating income (Rogers)
(above) ....................................................................... 96,000
Income tax expense ....................................................... $268,064
e. $204,480
Clarke will pay $200,000 in connection with its operating income ($500,000 ×
40%) because the unrealized gain cannot be deferred. Clarke also receives
$56,000 in dividends from Rogers ($80,000 × 70%). Tax payment on these
dividends is $4,480 ($56,000 × 20% × 40%). The difference between the payment
by Clarke ($204,480) and the company's expense in (d.) ($172,064) is created by
the premature payment of the tax (a deferred tax asset) on the unrealized gain
($90,000) less the deferred tax liability on the parent's equity accrual ($100,800)
in excess of dividends received ($56,000).
21. (20 Minutes) (Comparison of income tax expense and payable on separate and
consolidated tax returns.)
a. Consolidated Return—2011
Piranto income 2011 (sales less expenses) ...................................... $300,000

Slinton income 2011 (sales less expenses) ....................................... 100,000
2010 gain realized in 2011 .................................................................... 120,000
2011 deferred gain ................................................................................ (150,000)
Taxable income ............................................................................... $370,000
Tax rate ................................................................................................ 40%
Income tax payable—current ......................................................... $148,000
7-14
Because no temporary differences exist in this problem, the income tax expense
would also be $148,000. The unrealized gain is not taxed until realized. Dividend
income is not important because a consolidated return is being filed.
b. Separate Returns—2011
On its separate tax return, Piranto will report taxable income of $300,000—the
unrealized gains cannot be deferred. The dividends would not be taxable
because Slinton still meets the criteria to be a member of an affiliated group. A
consolidated return is not a requirement for these dividends to be excluded.
Thus, income taxes payable by Piranto would be $120,000 ($300,000 × 40%).
To determine the income tax expense for Piranto, the two temporary differences
must be taken into account:
Taxable income .............................................................. $300,000

Gain taxed in 2010 although realized
in 2011 ....................................................................... 120,000
Gain taxed in 2011 although not yet realized ............... (150,000)
2011 realized income subject to taxation .................... $270,000
Tax rate ........................................................................... 40%
The $12,000 difference between the expense and the payable is the tax effect on
the net unrealized gain ($30,000 × 40%).
Slinton will have an expense and payable of $40,000 ($100,000 × 40%).
22. (45 Minutes) (Comparison of income tax expense and payable on separate and
consolidated tax returns. Includes question on mutual ownership and the
conventional approach.)
a. Total income tax expense is $156,877. Because of the level of ownership,

separate returns must be filed. Unrealized gains are taxed immediately as are
intra-entity dividends.
Because the unrealized gains are deferred on the consolidated financial

statements, Boxwood's expense would be $34,400 or 40% of $86,000 in realized
income ($100,000 + $18,000 – $32,000).
Lake's income subject to taxation includes its $300,000 in operating income

plus $30,960 in income accruing from its investment in Boxwood (60% of the
after-tax income of $51,600 [$86,000 – $34,400]). Income tax expense for Lake is
computed as follows:
7-15
Operating income .......................................................... $300,000

Equity income ................................................................ $30,960
Taxable portion .............................................................. 20% 6,192
Income eventually subject to taxation ......................... $306,192
Tax rate ............................................................................ 40%
Income tax expense Lake (rounded) ............................. $122,477
Income tax expense Boxwood (above) ......................... 34,400
Total income tax expense ............................................. $156,877
b. Boxwood will pay $40,000 ($100,000 × 40%) because separate returns are filed.
Lake, however, will pay its taxes based on dividends received rather than on the
equity accrual. A deferred income tax liability would be established for the
difference. Lake's payment for the current year is computed as follows:
Operating income ........................................................... $300,000

Dividend income (60% × $10,000) ................................. $6,000
Taxable portion .............................................................. 20% 1,200
Income currently taxable ............................................... $301,200
Tax rate .......................................................................... 40%
Income tax payable—Lake ............................................ $120,480
Income tax payable—Boxwood (above) ...................... 40,000
Total income tax payable current ................................. $160,480
22. (continued)
The $3,603 difference between the expense in a. and the payable in b. is created
by the following two effects:
Deferred income tax liability on equity income accrual not yet taxed
($30,960 – $6,000 = $24,960 × 20% × 40%) .................................. $1,997
Deferred income tax asset on net unrealized gain
($32,000 – $18,000 = $14,000 × 40%) ........................................... 5,600
Net decrease in expense ................................................................... $3,603
c. Because a consolidated tax return is filed, unrealized gains are deferred in the
same manner as for external reporting purposes. Dividend income is not
taxable.
Lake's operating income ............................................... $300,000

Boxwood's operating income ....................................... $100,000
Prior year unrealized gain ............................................. 18,000
Current year unrealized gain ......................................... (32,000) 86,000
Income subject to taxation (and currently taxable) ..... $386,000
Tax rate ........................................................................... 40%
7-16
23. (30 Minutes) (Computation of income tax expense and income tax payable on
consolidated and separate tax returns.)
a. Operating income .......................................................... $450,000

Tax rate .......................................................................... 40%
Taxes to be paid ............................................................. $180,000
$50,000 unrealized gain is deferred). Intra-entity income and dividends are not
relevant because a consolidated return is filed.
b. Total taxes to be paid are $200,000. Robertson would have to pay $80,000 or
40% of its $200,000 operating income. Garrison would pay $120,000 or 40% of
its $300,000 operating income. The unrealized gain is not deferred because
separate returns are being filed. Intra-entity dividends are not taxable because
the parties still qualify as an affiliated group even though separate returns are
being filed.
c. Robertson must report an income tax expense of $80,000 or 40% of its $200,000
operating income.
23. (continued)
Garrison records its expense based on the revenue recognized during the
period. Thus, the expense is computed on an operating income of $250,000 (the
net unrealized gain is not recognized in this period) along with equity income
from Robertson of $84,000 (70% of that company's $120,000 after-tax income).
Garrison will record an income tax expense of $100,000 in connection with the
operating income ($250,000 × 40%) and $6,720 resulting from its equity income
($84,000 × 20% × 40%). Total expense to be reported amounts to $186,720 for
Garrison and Robertson ($80,000 + $100,000 + $6,720).
d. Garrison will pay $120,000 in connection with its operating income ($300,000 ×
40%) and $2,400 because of the dividends received from Robertson. Garrison
will receive $30,000 in dividends based on its 60% ownership. Of this total, only
$6,000 (20%) is taxable. Thus, at a 40% rate, the tax on the dividends would
amount to $2,400 ($6,000 × 40%). The total income taxes payable by Garrison is
$122,400 ($120,000 + $2,400).
24. (10 Minutes) (Impact on goodwill of assets with a different tax vs. book value.)
7-17
The assets and liabilities of Kew (the subsidiary) will be consolidated at their
individual fair values (netting to $500,000). However, both the buildings and
equipment have a tax basis that is lower than fair value. Thus, for tax purposes,
future depreciation expense will be lower on the tax return so that taxable
income will exceed book income. The higher taxable income (anticipated in the
future) creates a deferred tax liability at the time the combination is created.
Tax Fair Temporary

Basis Value Difference
Buildings ........................................ $140,000 $180,000 $40,000
Equipment ...................................... 150,000 200,000 50,000
Total temporary difference ...... $90,000
Tax rate ...................................... 30%
Deferred tax liability ................. $27,000
Consequently, Kew's accounts will be consolidated as follows: (parentheses

indicate a credit balance)
Accounts receivable ...................................................... $110,000

Inventory ......................................................................... 130,000
Land ............................................................................... 100,000
Buildings ........................................................................ 180,000
Equipment ....................................................................... 200,000
24. (continued)
Liabilities ......................................................................... (220,000)

Deferred tax liability ....................................................... (27,000)
Assigned to specific accounts ..................................... 473,000
Purchase price ............................................................... 650,000
Excess assigned to goodwill ........................................ $177,000
25. (55 Minutes) (Consolidation worksheet for a father-son-grandson combination.

Includes intra-entity inventory transfers.)
The following computations are needed before the consolidation worksheet is

prepared: calculation of the deferred gains in beginning and ending inventory.
Beginning Unrealized Gain (Wilson)

(January 1, 2011 Inventory Transfer Price (goods remaining) =
Balance) Cost + .25 Cost
$60,000 = 1.25 Cost
$48,000 = Cost
7-18
$12,000 is Unrealized gain

Ending Unrealized Gain (Wilson)
(December 31, 2011 Inventory Transfer Price (goods remaining) =
Balance) Cost + .25 Cost
$90,000 = 1.25 Cost
$72,000 = Cost
$18,000 is Unrealized gain
CONSOLIDATION ENTRIES
Entry *G
Retained earnings, 1/1/11 (Wilson) ......................... 12,000
Cost of goods sold .............................................. 12,000
(To recognize income on intra-entity inventory transfers made in previous
year but not resold until current year as per above computation.)
Entry *C
Retained earnings, 1/1/11 (House) ................................ 11,200
Investment in Wilson .......................................... 11,200
(To convert investment account from partial equity method to equity method.
Unrealized gain shown in Entry *G is not properly reflected by parent under
partial equity method [12,000 × 70% = $8,400 income decrease] nor would the
$2,800 in amortization expense for 2009–2010. Thus, a reduction of $11,200 is
required. Because Cuddy is a current year acquisition, no prior conversion to
equity method is required for the investment.)
25. (continued)
Entry S1
Common stock (Cuddy) ................................................ 150,000
Retained earnings, 1/1/11 (Cuddy) ............................... 150,000
Investment in Cuddy (80%) ....................................... 240,000
Noncontrolling interest in Cuddy common stock (20%) 60,000
(To eliminate Cuddy's stockholders' equity against the corresponding
investment balance and to recognize noncontrolling interest on common stock.)
Entry S2
Common stock (Wilson) ................................................ 310,000
Retained earnings, 1/1/11 (Wilson)
(adjusted by Entry *G) .............................................. 578,000
Investment in Wilson (70%) ................................ 621,600
Noncontrolling interest in Wilson (30%) ........... 266,400
(To eliminate Wilson's stockholders' equity against corresponding investment
balance and to recognize noncontrolling interest.)
Entry A
Buildings ......................................................................... 54,000
7-19
Franchise contracts ....................................................... 32,000

Goodwill ........................................................................... 140,000
Equipment ................................................................. 10,000
Investment in Wilson ................................................ 151,200
Noncontrolling interest in Wilson ............................ 64,800
(To allocate excess payment made in connection with purchase of Wilson
shown above. Amortization for 2009 and 2010 has been taken into account in
determining the January 1, 2011 value for each account.)
Entry I1
Income of Cuddy ...................................................... 56,000
Investment in Cuddy ........................................... 56,000
(To eliminate intra-entity income accrued by both House and Wilson during
the year.)
Entry I2
Income of Wilson ...................................................... 91,000
Investment in Wilson .......................................... 91,000
(To eliminate intra-entity income accrued by House during the year.)
Entry D1
Investment in Cuddy ............................................... 40,000
Dividends paid (80%) (Cuddy) ............................ 40,000
(To eliminate effects of intra-entity dividend payments.)
25. (continued)
Entry D2
Investment in Wilson ............................................... 67,200
Dividends paid (70%) (Wilson) ........................... 67,200
(To eliminate effects of intra-entity dividend payments.)
Entry E
Operating expenses ................................................. 2,000
Equipment ............................................................... 5,000
Franchise contracts ............................................ 4,000
Buildings ............................................................... 3,000
(To record 2011 amortization on excess payment made in connection with
acquisition of Wilson Company.)
Entry TI
Sales and other revenues ........................................ 200,000
(To eliminate intra-entity inventory sales for the current year.)
7-20
Entry G
Cost of goods sold ................................................... 18,000
Inventory ...............................................................
18,000
(To defer unrealized gain in ending inventory.)
Noncontrolling Interest in Net Income of Cuddy:
Reported net income $70,000

Noncontrolling interest in Cuddy income—common ............... $14,000
Noncontrolling Interest in net income of Wilson:
Reported operational income $130,000

Equity income of Cuddy ($70,000 × 40%) ................................... 28,000
Excess amortization ..................................................................... (2,000)
Recognition of 2010 gain (Entry *G) 12,000
Deferral of 2011 unrealized gain (Entry G) (18,000)
Realized income $150,000
Noncontrolling interest in net income of Wilson $ 45,000
7-21
25. (continued)
HOUSE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Consolidation Worksheet
December 31, 2011
Accounts House Wilson Cuddy Consolidation EntriesNoncontrollingConsolidated

Corp. Company Company Debit Credit Interest Balance
Sales and other revenue (900,000) (700,000) (300,000) (TI) 200,000 (1,700,000)
Cost of goods sold 551,000 300,000 140,000 (G) 18,000 (*G) 12,000 797,000
(TI) 200,000
Operating expenses 219,000 270,000 90,000 (E) 2,000 581,000
Income of Wilson Company (91,000) (I2) 91,000 -0-
Income of Cuddy Company (28,000) (28,000) (I1) 56,000 -0-
Net income (249,000) (158,000) (70,000)
Consolidated net income (322,000)
Noncontrolling interest in
Wilson net income (45,000) 45,000
Noncontrolling interest in
Cuddy net income (14,000) 14,000
To House Corporation (263,000)
Retained earnings, 1/1/11:
—House Corporation (820,000) (*C) 11,200 (808,800)
—Wilson Company (590,000) (*G) 12,000 -0-
(S2)578,000
—Cuddy Company (150,000) (S1)150,000 -0-
Net Income (249,000) (158,000) (70,000) (263,000)
Dividends paid
—House Corporation 100,000 100,000
—Wilson Company 96,000 (D2) 67,200 28,800 -0-
—Cuddy Company 50,000 (D1) 40,000 10,000 -0-
Retained earnings, 12/31/11 (969,000) (652,000) (170,000) (971,800)
7-22
25. (continued)
Accounts House Wilson Cuddy Consolidation EntriesNoncontrollingConsolidated

Corp. Company Company Debit Credit Interest Balance
Cash and receivables 220,000 334,000 67,000 621,000
Inventory 390,200 320,000 103,000 (G) 18,000 795,200
Investment in Wilson Company 807,800 (D2) 67,200 (*C) 11,200 -0-
(S2) 621,600
(I2) 91,000
(A) 151,200
Investment in Cuddy Company 128,000 128,000 (D1) 40,000 (S1) 240,000 -0-
(I1) 56,000
Buildings 385,000 320,000 144,000 (A) 54,000 (E) 3,000 900,000
Equipment 310,000 130,000 88,000 (E) 5,000 (A) 10,000 523,000
Land 180,000 300,000 16,000 496,000
Goodwill (A) 140,000 140,000
Franchise Contracts (A) 32,000 (E) 4,000 28,000
Total assets 2,421,000 1,532,000 418,000 3,503,200
Liabilities (632,000) (570,000) (98,000) (1,300,000)

Noncontrolling interest in Cuddy (S1) 60,000 (60,000)
Noncontrolling interest in Wilson (S2) 266,400
Noncontrolling interest in (A) 64,800 (331,200)
subsidiary companies 411,400 (411,400)
Common stock (820,000) (310,000) (150,000) (S1) 150,000 (820,000)
(S2) 310,000
Retained earnings (above) (969,000) (652,000) (170,000) (971,800)
Total liabilities and equities (2,421,000) (1,532,000) (418,000) 1,916,400 1,916,400 (3,503,200)
Parentheses indicate a credit balance.
7-23
26. (20 Minutes) (Consolidation entries for a mutual holding business combination)
a. Acquisition Price Allocation and Amortization Mighty's Purchase of Lowly

Consideration transferred ............................................ $420,000
Lowly’s business fair value ........................................... 700,000
Book value acquired ....................................................... (600,000)
Trademarks ..................................................................... $100,000
Annual amortization (20-year life) ................................. $ 5,000
Entry *C
Investment in Lowly ................................................. 117,000
Retained earnings, 1/1/11 (Mighty) .................... 117,000
(To accrue income to parent during the previous years as measured by
increase in book value [$200,000 × 60%] and amortization expense of $3,000
[$5,000 × 60%] for the previous year.)
Entry S1
Common stock (Lowly) ............................................ 300,000
Retained earnings, 1/1/11 (Lowly) ........................... 500,000
Investment in Lowly (60%) ................................. 480,000
Noncontrolling interest in Lowly 1/1/11 (40%) .. 320,000
(To eliminate subsidiary stockholders' equity accounts against investment
account and to recognize noncontrolling interest ownership.)
Entry S2
Treasury stock .......................................................... 240,000
Investment in Mighty ........................................... 240,000
(To reclassify cost of parent shares as treasury stock.)
Entry A
Trademarks ............................................................... 95,000
Investment in Lowly ............................................ 57,000
Noncontrolling interest in Lowly 1/1/11 (40%) .. 38,000
(To recognize unamortized portion of acquisition-date excess fair value.)
Entry E
Amortization Expense .............................................. 5,000
Trademarks .......................................................... 5,000
(To record trademarks amortization expense for 2011.)
Noncontrolling interest in subsidiary income = 40% × ($40,000 - $5,000) = $14,000
7-24
27. (80 Minutes) (Prepare consolidation worksheet for a father-son-grandson

combination. Also asks about income taxes paid on both a separate and a
consolidated return)
a. Acquisition-Date Allocation and Amortization

The January 1, 2010 book values are determined by removing the 2010 income
from the January 1, 2011 book values (based on equity accounts).
Consideration transferred for Stookey ......................... $344,000

Stookey business fair value .......................................... $430,000
Stookey book value ....................................................... (380,000)
Customer List .................................................................. $ 50,000
Life .................................................................................. 10 Years
Annual amortization ...................................................... $ 5,000
Consideration transferred for Yarrow ........................... $720,000

Yarrow business fair value ........................................... $800,000
Yarrow book value .......................................................... 740,000
Copyright ........................................................................ $ 60,000
Life .................................................................................. 15 Years
Annual amortization ...................................................... $ 4,000
Entry *G
Retained earnings, 1/1/11 (Stookey) ....................... 7,680
(To give effect to unrealized gain from 2010. Amount is calculated based on
normal 48% markup [found from Income Statement] multiplied by $16,000
retained inventory [20% of $80,000])
Entry *C1
Investment in Stookey ............................................. 85,856
Retained earnings, 1/1/11 (Yarrow) .................... 85,856
(To recognize equity income accruing from Yarrow's investment in Stookey
during 2010. Because the initial value method is applied and no dividends
paid, no income has been recognized in connection with the 2010 ownership
of Stookey. Reported income of $120,000 [2010] less unrealized gain of
$7,680 deferred above indicates income of $112,320. Based on 80%
ownership, an $89,856 accrual is needed, which is reduced by the $4,000
amortization (80% × $5,000) for that year.
7-25
27. (continued)
Entry *C2
Investment in Yarrow ............................................... 217,670
Retained earnings, 1/1/11 (Travers) ................... 217,670
(To recognize equity income accruing from Travers' investment in Yarrow
during 2010. Because the initial method is applied and no dividends paid,
income has not been recognized in connection with the 2010 ownership of
Yarrow. Income of $245,856 is calculated based on reported income of
$160,000 [2010] plus the $85,856 accrual recognized in Entry *C1. Ownership
of 90% dictates a $221,270 accrual that is then reduced to $217,670 by the
$3,600 [90% × $4,000] amortization applicable to 2010.)
Entry S1
Common stock (Stookey) ........................................ 200,000
Retained earnings, 1/1/11 (Stookey, as adjusted
by Entry *G) ......................................................... 292,320
Investment in Stookey (80%) ........................ 393,856
Noncontrolling interest in Stookey (20%) .... 98,464
(To eliminate stockholders' equity accounts of subsidiary [Stookey] against
corresponding balance in investment account and to recognize
noncontrolling interest ownership.)
Entry S2
Common stock (Yarrow) .......................................... 300,000
Retained earnings, 1/1/11 (Yarrow, as adjusted
by Entry *C1) ........................................................ 685,856
Investment in Yarrow (90%) .......................... 887,270
Noncontrolling interest in Yarrow (10%) ...... 98,586
(To eliminate stockholders’ equity accounts of subsidiary Yarrow against
corresponding balance in investment account and to recognize
noncontrolling interest ownership.)
Entry A1
Customer list.............................................................. 45,000
Investment in Stookey ........................................ 36,000
Noncontrolling interest in Stookey (20%) ......... 9,000
(To recognize January 1, 2011 unamortized portion of acquisition price

assigned to Stookey’s customer list.)
27. (continued)
Entry A2
7-26
Copyright ................................................................... 56,000

Investment in Yarrow . ......................................... 50,400
Noncontrolling interest in Yarrow ...................... 5,600
(To recognize January 1, 2011 unamortized portion of acquisition price
assigned to copyright.)
Entry E
Operating expenses .................................................. 9,000
Customer list ........................................................ 5,000
Copyright .............................................................. 4,000
(To recognize amortization expense for 2011—$5,000 in connection with
Travers' investment and $3,000 in connection with Yarrow's investment.)
Entry Tl
Sales .......................................................................... 100,000
(To eliminate intra-entity inventory transfers made during 2011.)
Entry G
Inventory (current assets) .................................. 9,600
(To defer unrealized gain on ending inventory—$20,000 × 48% markup.)
Noncontrolling Interest in Stookey's Net Income

2011 Reported net income ............................................ $100,000
Customer list amortization ............................................ (5,000)
Realization of 2010 deferred income (*G) .................... 7,680
Deferral of 2011 unrealized gain (G) ............................. (9,600)
Realized income 2011 .................................................... $93,080
Noncontrolling interest in Stookey's net income ........ $18,616
Noncontrolling Interest in Yarrow's Net Income

2011 Reported net income ............................................ $200,000
Copyright amortization .................................................. (4,000)
Accrual of Stookey's income (80% of $93,080
realized income [computed above]) ........................ 74,464
Realized income—2011 ................................................. $270,464
Noncontrolling interest in Yarrow's net income .......... $27,046
7-27
27. (continued) TRAVERS COMPANY AND CONSOLIDATED SUBSIDIARIES

Consolidation Worksheet
December 31, 2011
Travers Yarrow Stookey Consolidation EntriesNoncontrollingConsolidated
Accounts Company Company Company Debit Credit Interest Balances
Sales and other revenues (900,000) (600,000) (500,000) (Tl) 100,000 (1,900,000)
Cost of goods sold 480,000 320,000 260,000 (G) 9,600 (*G) 7,680 961,920
(TI) 100,000
Operating expenses 100,000 80,000 140,000 (E) 9,000 329,000
Separate company net income (320,000) (200,000) (100,000)
Consolidated net income (609,080)
NCI in Yarrow's net income (27,046) 27,046
NCI in Stookey's net income (18,616) 18,616
To controlling interest (563,418)
Retained earnings, 1/1/11:
Travers Company (700,000) (*C2) 217,670 (917,670)
Yarrow Company (600,000) (S2) 685,856 (*C1) 85,856 -0-
Stookey Company (300,000) (*G) 7,680 -0-
(S1) 292,320
Net Income (above) (320,000) (200,000) (100,000) (563,418)
Dividends paid 128,000 128,000
Retained earnings, 12/31/11 (892,000) (800,000) (400,000) (1,353,088)
Current assets 444,000 380,000 280,000 (G) 9,600 1,094,400

Investment in Yarrow Company 720,000 (*C2) 217,670 (S2) 887,270 -0-
(A2) 50,400
Investment in Stookey Company 344,000 (*C1) 85,856 (S1) 393,856 -0-
(A1) 36,000
Land, buildings, & equipment (net) 949,000 836,000 520,000 2,305,000
Customer list (A1) 45,000 (E) 5,000 40,000
Copyright (A2) 56,000 (E) 4,000 52,000
Total assets 2,113,000 1,560,000 800,000 3,491,400
Liabilities (721,000) (460,000) (200,000) (1,381,000)

Common stock (500,000) (300,000) (200,000) (S1) 200,000
(S2) 300,000 (500,000)
Retained earnings, 12/31/11 (above) (892,000) (800,000) (400,000) (S1) 98,464 (1,353,088)
NCI interest in Stookey, 1/1/11 (A1) 9,000 (107,464)
(S2) 98,586
Noncontrolling interest in Yarrow, 1/1/11 (A2) 5,600 (104,186)
Noncontrolling interests in subsidiaries (257,312) (257,312)
Total liabilities and equities (2,113,000) (1,560,000) (800,000) 2,008,982 2,008,982 (3,491,400)
7-28
27. (continued)
b. Travers' reported income .................................................................... $320,000

Yarrow's reported income ................................................................... 200,000
Dividend income (none collected) ...................................................... -0-
Intra-entity gains (no transfers) .......................................................... -0-
Amortization expense .......................................................................... (9,000)
Taxable income .................................................................................... $511,000
Tax rate ................................................................................................. 45%
Income tax payable .............................................................................. $229,950
c. Stookey's reported income ................................................................. $100,000

(Unrealized gains are not deferred on a separate
tax return.)
Tax rate ................................................................................................. 45%
Income tax payable .............................................................................. $45,000
d. (1) Because 80% of Stookey's stock is owned by Yarrow, intra-entity dividends

would be nontaxable. Consequently, no temporary difference is created by
Stookey's failure to pay a dividend.
(2) Stookey's unrealized gains are recognized in one time period for financial
reporting purposes and in a different time period for tax purposes. A
temporary difference is created. The net effect is an increase in taxable
income by $1,920 over reported income:
2011 Unrealized gain taxed in 2011 ..................................................... $9,600

2010 Unrealized gain taxed previously in 2010 .................................. (7,680)
Increase in taxable income ................................................................. $1,920
Tax rate ................................................................................................. 45%
Deterred income tax asset .................................................................. $ 864
Income Tax Expense:

Travers and Yarrow—payable (part b) .......................................... $229,950
Stookey—payable (part c) .............................................................. 45,000
Total taxes to be paid—2011 .......................................................... $274,950
Prepayment (asset) (above) ........................................................... (864)
Income tax expense 2011................................................................ $274,086
27. d. (continued)
Because a single rate is used, income tax expense can also be computed by
taking consolidated net income (prior to noncontrolling interest reduction) of
$609,080 (part a.) and multiplying by the 45% tax rate to obtain $274,086.
7-29
Income tax expense—current ....................................... 274,086

Deferred income tax—asset .......................................... 864
Income tax payable .................................................. 274,950
28. (40 Minutes) (Series of questions about a business combination and its income
tax reporting)
a. Partial equity method. "Income of Soludan" is 80% of Soludan's reported total.
b. $12,000. Reduction is evidenced by a $338,000 figure reported for consolidated

inventory rather than the $350,000 total for the two companies.
c. $37,500. Consolidated operating expenses have increased by $2,500, evidently

the annual amortization. Because a 15-year life is assumed by the combination,
the amount originally allocated to trademarks must have been $37,500.
d. $120,000. Decrease shown in consolidated sales account.
e. Upstream. "Noncontrolling interest in Soludan Company's income" is $18,700.

Because this amount is not equal to 20% of Soludan's reported income less
excess amortization ($100,000 – $2,500), realized income must have been
adjusted for unrealized gains. Subsidiary income is only adjusted to show the
effects of upstream transfers.
f. $20,000. For both receivables and liabilities, the consolidated total is $20,000
less than the sum of the two companies.
g. $8,000. Consolidated cost of goods sold is decreased by $120,000 (to $780,000)

in eliminating intra-entity sales. The increase of $12,000 created by the ending
unrealized gain (see part b.) would then leave a $792,000 balance. Because
$784,000 is the ending balance reported for consolidated cost of goods sold, an
$8,000 unrealized gain must have been deferred from the previous year.
28. (continued)
h. Because the trademarks balance now stands at $32,500, amortization expense

of $2,500 has been recognized, $2,500 in the previous year. In addition, an
$8,000 unrealized gain from the prior year (see part g.) is recognized.
Amortization expense—prior year × 80% ..................... $2,000

Unrealized gain—upstream effect on
parent's retained earnings is $8,000 × 80% ............. 6,400
Adjustment to parent’s beginning retained earnings .. $8,400
7-30
i. This figure is computed as follows:

Book value of subsidiary—1/1 ...................................... $370,000
Unrealized gain in beginning inventory (see above) .. (8,000)
Realized book value .................................................... $362,000
Excess allocation at 1/1 .................................................. 35,000
Subsidiary valuation basis 1/1 ...................................... 397,000
Noncontrolling interest percentage .............................. 20%
Noncontrolling interest 1/1 ........................................... $79,400
Noncontrolling interest in Soludan's income
(as reported) .............................................................. 18,700
Noncontrolling interest in Soludan's dividends
($20,000 × 20%) ......................................................... (4,000)
Ending noncontrolling interest ..................................... $94,100
j. For a consolidated return, unrealized gains are deferred as in the consolidated

statements. At a 40% rate, both the expense and payable would be $117,400.
Income Tax Expense ..................................................... 117,400

Income Tax Payable ................................................. 117,400
Consolidated Taxable Income:

Sales .............................................................................................. $1,280,000
Cost of goods sold ....................................................................... (784,000)
Operating expenses ..................................................................... (202,500)
Taxable income ....................................................................... $ 293,500
k. On a separate return, Politan would report its operating income of $200,000

leading to a tax expense and payable of $80,000. Because of the level of
ownership, intra-entity dividend (or investment) income is omitted.
Income tax expense ....................................................... 80,000

28. k. (continued)
On a separate return, Soludan would report $100,000 operating income for a

payable of $40,000. The unrealized gains are accounted for in different time
periods in the financial statements, thus, a temporary difference is created. The
beginning gain of $8,000 was taxed in the previous year rather than currently.
The current gain of $12,000 is taxed now rather than next year; the tax paid this
year on the net $4,000 ($1,600) is a prepayment.
Income tax expense ....................................................... 38,400
7-31
Deferred income tax - asset .......................................... 1,600

Soludan's entry can also be computed as follows:

Reported income ............................................................................ $100,000
Unrealized gain from previous period realized currently ............ 8,000
Deferral of current unrealized gain ............................................... (12,000)
Realized income ............................................................................. $96,000
Tax rate ..................................................................................... 40%
Income tax expense ....................................................................... $38,400
Taxes payable .................................................................................. 40,000
Deferred tax asset ................................................................................ $ 1,600
29. (45 Minutes) Develop worksheet entries that were used to consolidate the
financial statements of a father-son-grandson combination.
Entry *G
Retained earnings, 1/1/11 (Delta) ............................ 15,000
(To recognize gain that was unrealized in 2010 [amount provided].)
Entry *C1
Retained earnings, 1/1/11 (Delta) ............................ 7,000
Investment in Omega Company ......................... 7,000
(To recognize amortization expense from Delta’s acquisition for 2010.)
29. (continued)
Entry *C2
Retained earnings, 1/1/11 (Alpha) ........................... 27,600
Investment in Delta Company ............................ 27,600
To recognize accrual adjustments for excess amortization
and inventory deferral as follows:
Excess amortization from Delta acquisition
(80% × $6,250 × 2 years)........................................ $10,000
Deltas’ share of excess amortization from Omega acquisition
(80% × [70% × $10,000] × 1 year) .......................... 5,600
Inventory profit deferral at 1/1/11 (80% × $15,000) . 12,000
*C2 adjustment .......................................................... $27,600
Entry S1
Common stock (Omega) .......................................... 100,000
Retained earnings, 1/1/11 (Omega) ......................... 100,000
Investment in Omega (70%) ................................ 140,000
7-32
Noncontrolling Interest in Omega (30%) ........... 60,000

(To eliminate stockholders' equity accounts of Omega against parent's
Investment account and to recognize outside ownership.)
Entry S2
Common stock (Delta) ............................................. 120,000
Retained earnings, 1/1/11 (Delta, as adjusted) ....... 378,000
Investment in Delta (80%) ................................... 398,400
Noncontrolling interest in Delta (20%) .............. 99,600
(To eliminate stockholders' equity accounts of Delta [as adjusted as Entry *G
and Entry *C1] against corresponding balance in Investment account and to
recognize outside ownership.)
Entry A
Copyrights ................................................................. 222,500
Investment in Delta ............................................. 90,000
Investment in Omega .......................................... 77,000
Noncontrolling interest in Delta .......................... 22,500
Noncontrolling interest in Omega ...................... 33,000
(To recognize January 1, 2011 unamortized copyrights, 2 years amortization
recorded on first investment but only one year for second.)
Entry I1
Income of Subsidiary ............................................... 144,000
Investment in Delta ............................................. 144,000
(To eliminate intra-entity income accrual found on Alpha's records.)
29. (continued)
Entry I2
Income of Subsidiary ............................................... 49,000
Investment in Omega .......................................... 49,000
(To eliminate intra-entity income accrual found on Delta's records.)
Entry D1
Investment in Delta ................................................... 32,000
Dividends paid (Delta) ......................................... 32,000
(To eliminate intra-entity dividend payments, 80% of Delta's payment.)
Entry D2
Investment in Omega ............................................... 35,000
Dividends paid (Omega) ..................................... 35,000
(To eliminate intra-entity dividend payments, 70% of Omega's payment.)
7-33
Entry E
Operating expenses ................................................. 16,250
Copyrights ........................................................... 16,250
(Current year amortization, $6,250 on first acquisition and $10,000 on
second.)
Entry Tl
Sales .......................................................................... 200,000
(To eliminate intra-entity inventory transfer.)
Entry G
Inventory ............................................................... 22,000
(To defer ending unrealized gain on intra-entity transfers.)
Noncontrolling Interest in Omega's Income:

Reported income ............................................................ $70,000
Excess fair value amortization ...................................... (10,000)
Accrual-based income.................................................... 60,000
Noncontrolling interest in Omega’s income ................ $18,000
29. (continued)
Noncontrolling Interest in Delta's Income:

Reported operating income .......................................... $131,000
Equity income investment in Omega (70% × $60,000) 42,000
Amortization expense .................................................... (6,250)
2010 Unrealized income realized in 2011 ...................... 15,000
2011 Unrealized income realized in 2011 ..................... (22,000)
Accrual-based income—Delta (2011) ........................... $159,750
Noncontrolling interest in Delta's income (2011) ........ $31,950
Noncontrolling interest in Delta Company ...................

Noncontrolling interest, 1/01/11 (Entry S2) ............. $99,600
Noncontrolling interest, 1/01/11 (Entry A) ............... 22,500
Noncontrolling interest in Delta’s income (above) . 31,950
Dividends paid to noncontrolling interest
($40,000 × 20%) ....................................................... (8,000)
7-34
Noncontrolling interest in Delta, 12/31/11 .......... $146,050
Noncontrolling interest in Omega Company ................

Noncontrolling interest, 1/01/11 (Entry S1) ............. $60,000
Noncontrolling interest in Omega’s income (above) 18,000
Noncontrolling interest, 1/01/11 (Entry A) ............... 33,000
Dividends paid to noncontrolling interest ($50,000 × 30%) (15,000)
Noncontrolling interest in Omega, 12/31/11....... $96,000
Chapter 7 Excel Case Solution
Operating Dividends Excess

income paid amortizations
Summit $345,000 $150,000
Treeline $280,000 $100,000 $20,000
Basecamp $175,000 $40,000 $25,000
Ownership percentages
Summit-->Treeline 90%
Treeline-->Basecamp 70%
Treeline's share of Basecamp income:

Basecamp operating income $175,000
Accrual based income $150,000
Treeline ownership percentage 70%
Equity income from Basecamp $105,000
Summit's share of Treeline income:

Treeline operating income $280,000
Equity income from Basecamp 105,000
Treeline adjusted income $365,000
Summit ownership percentage 90%
Summit's share of reported income $328,500
Controlling interest in net income

Summit's operating income $345,000
Equity earnings in Treeline and Basecamp 328,500
Summit’s net income $673,500
Comparison
Consolidated net income (operating incomes less
7-35
amortizations) $755,000
Noncontrolling interest in consolidated net income
(30% × $150,000 plus 10% × $365,000) $81,500
Controlling interest in consolidated net income $673,500
Difference between Summit’s net income and controlling interest in

consolidated net income = -0-
RESEARCH CASE: CONSOLIDATED TAX EXPENSE
At www.thecoca-colacompany.com the annual financial statements and 10-K

provide an excellent set of statements and footnotes to review disclosures for
consolidated income tax issues.
In particular Note 17 provides details of the consolidated tax expense in Coca-

Cola’s 2006 annual report. The excerpt below shows the portion of the
footnote relating to components of deferred tax assets and liabilities and
carryforwards.
7-36
7-37
Another random document with
no related content on Scribd:
CAPITOLO II.
Storia.
PRIMO PERIODO
Divisione della storia — Origini di Pompei — Ercole e i

buoi di Gerione — Oschi e Pelasgi — I Sanniti —
Occupano la Campania — Dedizione di questa a Roma —
I Feriali Romani indicon guerra a’ Sanniti — Vittoria
dell’armi romane — Lega de’ Campani co’ Latini contro i
Romani — L. Aunio Setino e T. Manlio Torquato —
Disciplina militare — Battaglia al Vesuvio — Le Forche
Caudine — Rivincita de’ Romani — Cospirazioni campane
contro Roma — I Pompejani battono i soldati della flotta
romana — Ultima guerra de’ Sanniti contro i Romani.
Le ragioni stesse per le quali ebbi ad avvertire il lettore che alla

migliore intelligenza delle Rovine di Pompei mi occorresse d’aprire
una parentesi, per dire alquanto di questo monstrum horrendum,
informe, ingens che le aveva cagionate, non solo militano per questa
nuova che intraprendo col presente capitolo, ma sono ben anche
maggiori. D’altra parte, messomi all’opera con intenti più modesti,
l’amore all’argomento me ne suggerisce ora di maggiori, e la materia
sento crescermi sotto mano; il lettore non ha a concedermi che una
maggiore benevolenza.
La storia civile di Pompei non è guari complicata di fatti, non di molto
diversa da quella delle altre minori città italiane e massime
meridionali, che o furono confederate a Roma o ne divennero
colonie. La storia generale di queste città si lega in una parte a
quella delle altre undici città principali della Campania, e nell’altra
per lo più alla storia del mondo romano; la speciale non ricorda che
determinati avvenimenti, i quali hanno per lo più attinenza alla vita
municipale di essa. Io, nel raccoglierla dalle diverse fonti, l’ho divisa
in due distinti periodi, concedendo poi un singolare capitolo a ciò che
chiamerei storia morale ed un altro al miserando cataclisma che ne
chiuse l’interessante volume.
Pompeii, o Pompeja, come trovasi promiscuamente detto dai latini
scrittori, all’epoca della sua distruzione per opera del Vesuvio, cioè,
come già sa il lettore, nell’anno di Roma 932 e 79 di Cristo, era,
malgrado che Seneca punto non si peritasse a dichiararla celebrem
Campaniæ urbem, città di terzo ordine. Una città tuttavia, che per la
felice postura su d’una eminenza vulcanica e in riva al mare, —
poichè tutto ne scorga a ritenere che le acque del Tirreno
giugnessero a quel tempo fin presso le mura di essa, nè vi si
ritraessero che in conseguenza del cataclisma che le apportò la
morte, — e per la dolcezza del clima e la lussureggiante natura,
costituiva altra fra le località di questa magnifica parte d’Italia, che a
ragione fu detta — credo da Milton, il cantore immortale del Paradiso
Perduto — un pezzo di paradiso caduto in terra; epperò eletta da’
facoltosi Romani a sito di villeggiatura. Così ricordai già la casa che
vi aveva Marco Tullio Cicerone, per antonomasia detto l’Oratore
Romano, e quella che vi teneva lo storico Cajo Crispo Sallustio,
entrambe scoperte, e la visita delle Rovine altre pure ne additerà
celebri per i loro famosi proprietari; onde Stazio potesse lasciarci
memoria degli ozj pompejani in quel verso:
Nec Pompeiani placeant magis otia Sarni [27].
Imperocchè Pompei fosse bagnata dalle acque del fiume Sarno —

ora ridotto alle povere proporzioni di un ruscello — per cagione anzi
del quale, come avverrà di dire più avanti, si avessero i primi sentori
che ebbero a condurre alla scoperta della sepolta città. Il Sarno
scendendo, dal lato ove si vede ancora sorgere l’anfiteatro, al mare,
che qui faceva una curva la quale si estendeva insino a Stabia,
formava alla sua imboccatura un bacino, che costituiva il porto della
città, comune anche a Nola, ad Acerra ed a Nocera, così frequentato
ed operoso da rendere Pompei l’emporio delle più floride città
campane. Nè forse fu estraneo a siffatta circostanza il nome stesso
di essa, se nel greco idioma Πομπηίον suoni eziandio siccome a dire
emporio. Strabone non obliò di ricordare questo porto, e i libri, come
vedremo, ne registrarono eziandio qualche glorioso avvenimento.
La storia adunque di questa città e, più che essa, la scoperta e la
illustrazione de’ suoi edificj e de’ suoi monumenti, importantissima
riesce a rivelarci la vera storia intima di quei tempi, che le storie
generali non ci hanno lasciata che imperfetta, sì che sia d’uopo
racimolarla fra gli storici avvenimenti di altri popoli e da’ concetti dei
poeti, o da qualche altra scrittura, mescolata spesso a cose men
vere od incerte, per modo che, dopo tutto, sia mestieri di molto
discernimento e di induzioni e di congetture logiche non poche per
istabilire colle migliori probabilità i fatti.
Ma se malagevole è il còmpito di chi voglia esattamente ragionare
della vita intima di allora, che si dirà di chi presuma indagare le
origini delle città nostre e i confini territoriali, se intorno ad esse non
vennero che tardi gli scrittori che se ne occuparono, e questi pure,
dovendo appoggiarsi su tradizioni e favole, si ebbero a buttare
spesso alla fantasia, siccome puossi giudicare dalla lettura di Dionigi
d’Alicarnasso, di Catone, di Varrone e d’Eliano? Orazio medesimo,
comunque venuto in tempi più colti, non sapeva determinare se
all’Apulia o alla Lucania appartenesse la sua Venosa, siccome
appare da una Satira, nel seguente passo:
Lucanus an Appulus, anceps,

Nam Venusinus arat finem sub utrumque colonus
Missus ad hoc, pulsis (vetus est ut fama) Sabellis [28].
Gli è ad un tale riguardo che pur di Pompei non si possa precisare

quali fossero i fondatori e i primi abitatori. La favola, accarezzando
anche qui il popolare orgoglio, le assegna illustre origine, e Giulio
Solino, che ne tenne memoria, narra che Pompei avesse avuto
Ercole per fondatore, allorchè passò egli in Italia co’ buoi di Gerione.
Già nel capitolo antecedente toccai di sua venuta in queste parti e di
eroiche imprese compiutevi e della città di Ercolano che attestò di
lui: Pompei egualmente avrebbe il suo nome conseguito dalla
pompa colla quale dall’Eroe sarebbero ivi portate le tre teste del suo
nemico, il succitato Gerione, la cui uccisione fu delle dodici che gli
vengono attribuite, la decima di lui fatica [29]. Lasciando nondimeno
in disparte la mitologia e gli arcani suoi ascondimenti, stando
all’autorità di Strabone, i primi a mettersi attorno al golfo che curvasi
da Sorrento a Miseno, sarebbero stati gli Oschi od Opici, gli Ausoni,
gli Etruschi, i Tirreni e i Pelasgi, che sono anche i popoli più antichi di
cui si abbia memoria in Italia; se pure tutti questi popoli non sono
della sola razza pelasgica.
I Pelasgi contuttociò non attecchirono mai la loro padronanza nel
nostro paese; odiati sempre come stranieri e conquistatori, dovettero
mantenervisi armati. A quest’opposizione surta negli animi degli
aborigeni, s’aggiunsero naturali calamità, e Dionigi d’Alicarnasso
ricorda la sterilità e siccità dei campi e più ancora l’imperversar de’
vulcani e delle malattie; onde interrogato l’oracolo di Dodona, ne
avessero a responso: «Causa di tutti codesti mali essere lo sdegno
degli Dei, perchè frodati i Dioscuri, o Cabiri [30], della promessa
decima di tutto quanto nascerebbe, non avendola i Pelasgi attenuta
in quanto riguardasse i figliuoli.» Indegnò la spietata risposta, e
tumultuarono contro i capi e a tale venne la stanchezza de’ più che
questi in massa migrarono, e i pochi rimasti, spodestati degli averi,
vennero agevolmente ridotti in servitù.
Dall’Appennino centrale, dietro al corso del Volturno e dell’Ofanto,
scesero i Sanniti, gente mista di Sabini ed Ausonj, gentem opibus
armisque validam, come li giudica Tito Livio [31], conquistando. Erano
essi in quel tempo, cioè circa l’anno 420 avanti la venuta di Cristo,
arrivati omai all’apogeo della loro potenza, e superando Roma
stessa nel numero della popolazione e nella estensione del territorio,
ne erano divenuti i più formidabili avversarj. S’allargavano essi dal
mar Inferiore al Superiore, dal Liri alle montagne lucane e ai piani
dell’Apulia, e dominavano ne’ paesi che oggidì designiamo coi nomi
di Principato Ulteriore e di Abruzzo Citeriore. Sobrii ed indomiti,
difesi da valloni e torrenti, potevano a buon diritto codesti montanari
riuscire terribili a quei della pianura.
Superando gli ostacoli tutti, irruppero nella Volturnia, che essendo
piana cominciarono a chiamar Campania (da καμπος, pianura),
occuparono Vulturnio che denominarono Capua e successivamente
la Campania tutta, alla quale era capitale, e che si distendeva sul
mare dal Liri al Silaro, ubertosissima e popolata di dodici belle e
ricche città, tra le quali primeggiavano Pompei ed Ercolano.
Come dell’etrusca dominazione si rinvennero tracce negli scavi di
quest’ultima città in una medaglia e nella mensa Giunonale; così se
ne ebbero e in maggior copia e in essa città e in Pompei della
sannitica nelle diverse iscrizioni dettate in questa lingua, e il Giornale
degli Scavi, già da me ricordato, reca dotte dichiarazioni di taluna, a
migliore schiarimento di importanti questioni.
Allora i Sanniti divenuti Campani, sotto il nome di Mamertini, forse a
dire soldati di Marte, si posero al soldo di chi bisognava di
combattenti, ed estesero fino a Pesto la propria lingua, la quale, se
vuolsi attribuir fede al succitato Strabone, fu pur la stessa parlata da
Umbri, Osci, Dauni, Peucezj, Messapi, abitanti della Japigia, cioè nel
sud-est della penisola. Contuttociò essi, come già prima i Pelasgi,
non giunsero a naturarvi la loro dominazione: perocchè i costumi
campani e il carattere differenziassero di troppo, nè le lotte fra essi
dovessero tardare a scoppiare.
I libri settimo, ottavo e nono delle istorie di Tito Livio ci apprendono le
ulteriori vicissitudini della Campania, le cui sorti è a credersi fossero
pure comuni a Pompei, come identiche e comuni ne fossero le
politiche condizioni.
È per questo che a sopperire al difetto di peculiari notizie di questa
città che impresi col lettore a studiare, mi sia d’uopo colmare le
lacune, riassumendo da quelle dotte ed accurate pagine le più
saglienti che vi hanno maggiore attinenza.
Sappiam per esse come i Sanniti assaltassero ingiustamente i
Sidicini e come questi, inferiori di forze, ricorressero ai Campani. Se
non che, narra lo storico padovano, come, avendo i Campani
apportato piuttosto un nome che una giunta di forza a soccorso degli
alleati, snervati dal lusso e da una tal quale rilassatezza, propria del
resto delle condizioni del clima, fossero battuti nel paese dei Sidicini
da gente indurata nel mestiere dell’armi, e che però rivolgessero
sopra di sè tutta la mole della guerra. Perciocchè i Sanniti, messi da
parte i Sidicini ed assaliti i Campani, ch’erano antemurale de’
confinanti, fra Capua e Tifata, diedero loro una terribile rotta, nella
quale venne tagliato a pezzi il nerbo della loro gioventù.
A salvarsi allora da più fiere vendette, s’affrettarono i Campani a
ricorrere a Roma, e poichè invano ne ebbero sollecitata l’alleanza,
essendo già con vincoli d’amicizia legata essa ai Sanniti, non
trovarono spediente migliore di quello di una piena dedizione e fu
accolta.
Furono da Roma spacciati allora ai Sanniti i Feciali [32] per richiederli
delle cose tolte ai Campani, e poichè venne opposto il rifiuto, si
intimò loro solennemente la guerra, due eserciti mettendo in campo,
l’uno nella Campania, capitanato da Valerio, e l’altro nel Sannio, da
Aulo Cornelio comandato. Furon dubbie dapprima le sorti della
guerra; perocchè mai non si fosse combattuto per entrambe le parti
con maggior valore ed accanimento; ma da ultimo la vittoria si
dichiarò per l’armi romane con somma lode dei due suddetti consoli
e di Publio Decio tribuno.
Implorarono allora pace i Sanniti da’ Romani e l’ebbero colla
invocata facoltà di muover l’armi contro a’ Sidicini, che neppure dal
popolo romano eransi mai tenuti per amici. I Sidicini, vedutisi
seriamente minacciati, seguitando l’esempio de’ Campani,
avrebbero voluto alla lor volta concedersi a’ Romani; ma stavolta
essi ne vennero dispettati, perchè solo sospinti dalla necessità a
tanto stremo. Così stando le cose, non trovarono altro spediente che
volgersi ad altra parte ed offerirsi a’ Latini, che li accettarono
prontamente, e i Campani che meglio della fede a’ loro nuovi
Signori, anteponevano la vendetta dell’insulto patito da’ Sanniti,
entrarono pure nella lega. Reclamarono di ciò i Sanniti a Roma,
come di violata fede, ma n’ebbero ambigua risposta, perocchè in tal
modo si cercasse di non confessare apertamente la poca autorità sui
Latini; onde e questi e quelli della Campania, immemori del ricevuto
beneficio, così montarono in orgoglio — già superbi per natura, sì
che l’alterigia campana fosse passata in proverbio, — e tanta
accolsero ferocia, da macchinare ai danni de’ Romani stessi, sotto
colore di apparecchiarsi alla guerra contro i Sanniti.
Benchè tutto ciò si celasse con industria e si volesse, prima che i
Romani si movessero, battere i Sanniti, pur della trama se n’ebbe
sentore in Roma che tosto avvisò a prepararsi alla lotta.
Dissimulando tuttavia la cognizione di tanta ribellione, chiamarono i
Quiriti a sè dieci de’ maggiorenti latini, per impor loro ciò che fosse
per piacer meglio al Senato. Fra i trascelti vi fu un Lucio Annio
Setine pretore, cui furono largheggiate da’ Latini le più ampie facoltà.
Costui, mal ponderando con chi si avesse a fare, ebbe tanta albagia
che, tenuta altiera ed insolente concione avanti i Padri Coscritti, osò
farsi a proporre condizioni di pace eguali pei due popoli, pei Romani
cioè, e pei Latini; poichè, affermava egli, fosse piaciuto agli dei
immortali che eguali pur anche ne fossero le forze. Tito Manlio
Torquato, console, d’impeto non minore, udita cotale spavalderia,
rispose adeguatamente, e poichè Annio nell’uscir dal Senato,
inciampando fosse caduto e giacesse tramortito, Manlio veggendolo,
narra Tito Livio, che sclamasse: Ben gli sta, e voltosi poscia agli
astanti, proseguisse: Io vi darò, o Quiriti, le legioni dei Latini a terra,
come a terra vedete questo legato. — La voce del romano Console
talmente accese gli animi di tutti, che nel partirsi i legati, più gli
scampò dall’ira della plebe la cura de’ magistrati, che per ordine del
Console gli accompagnavano, che non il diritto delle genti.
Furono levati allora in Roma due eserciti per tale guerra, i quali,
attraversando Marsi e Peligni, s’ingrossarono di quello dei Sanniti e
presso Capua, dove già i Latini e i loro confederati erano convenuti,
posero gli accampamenti. Fu raccomandata la più severa disciplina
militare, reclamata ora più dal trovarsi a fronte gente di lingua,
costumi ed ordini di guerra non dissimili; e Tito Manlio così la volle
osservata che al figliuolo, che mosso dall’ardor giovanile aveva
disobbedito spingendosi ai posti nemici, e quivi era stato provocato
da Gemino Mezio che comandava la cavalleria toscana, e s’era seco
lui azzuffato e trapassato avealo di sua lancia e morto, comechè
vincitore, diè condanna di morte, e questa volle immediatamente dal
littore eseguita.
Fu terribile il cozzo dei due eserciti avversi, ma la battaglia, come già
sa il lettore per quanto fu detto nel capitolo precedente, combattuta
alle falde del Vesuvio, fu vinta dalle armi romane; comunque non
fossero durante la pugna stati punto giovati dai Sanniti, solo entrati
questi nella lizza quando le sorti non erano state più dubbie. Preso il
campo latino, assai de’ Campani in esso vi vennero fatti prigionieri.
Latini e Campani s’arresero a discrezione: al Lazio ed a Capua
venne tolto in castigo parte del loro territorio e l’autonomia, e divise
le terre; solo esente dalla pena andò la cavalleria dei Laurenti e dei
Campani perchè non ribellati; accordata a costoro inoltre la romana
cittadinanza, ed altri beneficj e privilegi concessi.
Questa grande battaglia seguiva negli anni 416 di Roma e 336
avanti Cristo. Di queste genti vinte Roma si valse pochi anni dopo
per venire a nuove guerre contro i Sanniti, i Lucani, i Vestini, gli Equi,
i Marsi, i Peligni, che pur le avevano dato un dì giovamento a
conquistar la pianura. Lunga e ostinata è la guerra, alternate le sorti,
finchè Papirio Cursore sbaraglia i Sanniti. Volendo questi venire a
patti e ricusati, e astretti pertanto a pugna disperata, ricorsero a
sottili accorgimenti e tratte infatti le legioni romane entro una valle
detta del Caudio, vi trovan interdetta l’uscita e il ritorno. Celebre è la
vergogna patita da’ Romani sotto il nome delle Forche Caudine [33],
e per la quale Ponzio, capitano dei Sanniti, spregiando l’avviso del
proprio vecchio padre Erennio, che avverso ai temperamenti
mediani, le truppe romane avrebbe voluto o rimandate senza infamia
per ottenere poi l’amicizia di Roma, o tutte trucidate ad impedirne
per tanto tempo i guerreschi conati, ottenute violentemente invece
larghe condizioni di pace, volle passassero sotto il giogo, primi
obbligandovi i consoli Postumio e Veturio, che vi si sobbarcarono
quasi ignudi; sottoponendo poi gli altri, come ciascuno era più vicino
di grado; indi per ultimo una ad una le legioni fra gli scherni e gli
insulti nemici.
Il Senato e il Popolo Romano, all’udir tanta abjezione, non vollero
ratificare l’ontosa pace, ed anzi pieni di sdegno e furore trassero dal
sofferto scorno divisamenti di allegra vendetta, e ripigliarono
incontanente la guerra. In essa, risultati vittoriosi i Romani, sotto il
comando di Papirio Cursore, furono così ingenerosi nella vittoria,
che caduto Ponzio nelle loro mani, sottopostolo alla sua volta al
giogo in Luceria [34], e tradottolo a Roma, lui che per seguir
clemenza li aveva poco innanzi della vita risparmiati a Caudio,
trucidarono vilmente, tardi ed indarno pentito di non aver ascoltato i
consigli della saviezza paterna.
Non fu lunga tra’ Romani e Sanniti l’alleanza: presto vennero
nuovamente alle armi; e quando la lotta sì spostò dal Sannio per
muovere contro gli Ausonj, che poi vennero interamente distrutti,
varie cospirazioni si ordirono contro Roma nelle città Campane, fra
le quali era, come sappiamo, Pompei. Fu allora che a reprimerle ed
a punirle si intrapresero in Roma inquisizioni contro taluni dei
principali cittadini di esse; ed anzi quando Luceria cadde in potere
de’ Sanniti e il presidio romano che vi era venne fatto per tradimento
prigione, presi in maggiore sospetto i Campani, le inquisizioni si
estesero più severe a loro carico, venendo eletto Cajo Menio a
dittatore per eseguirle.
Siffatte cose e rigori non eran proprj tuttavia a diradicare la ribellione
campana: da essa poi i Sanniti traevan partito a rinfocolar gli odj a
nuove imprese contro i Romani, ai quali agognarono ritorre Capua.
Ma Petelio e Sulpizio consoli li batterono completamente a
Malevento; onde poi dai Romani si chiamò la città Benevento, e
fama suonò che de’ Sanniti, presi o morti, vi rimanessero in quella
fazione all’incirca trentamila.
Eran gli anni 441 di Roma e 331 avanti Cristo, quando riportavasi
dall’aquile romane sì luminosa vittoria, la quale poi, consoli essendo
Lucio Papirio Cursore per la quinta volta e Cajo Giunto Bubulco per
la seconda e Cajo Petelio dittatore, venne susseguita dalla presa di
Nola.
Tre anni dopo, essendo a que’ consoli succeduti Quinto Fabio e
Cajo Marcio Rutilo, mentre il primo trovavasi impegnato in guerra co’
Toscani ed il secondo coi Sanniti, a’ quali toglieva per forza Alifa,
Publio Cornelio a capo della flotta romana nel mar tirreno, pensando
non rimanersene alla sua volta colle mani in mano nell’ufficio che
aveva di vigilare la spiaggia marittima, si spinse fin entro il golfo che
si comprende fra Sorrento e Miseno, e si accostando alle sponde del
lido campano, lasciò che le navi entrassero nel porto di Pompei e vi
sbarcassero affamati di rapina i suoi classiarii, come si appellavano
allora i soldati della marina.
Descrivere la licenza è più presto fatto che immaginarla: era già
essa nelle ordinarie abitudini militari e il soldato vi faceva più che nel
resto speciale assegnamento. Posero a saccomanno singolarmente
il territorio Nocerino, portando il guasto anche per ogni casale che
transitavano, speranzosi che obbligando i contadini a fuggire dinanzi
a loro, si avessero assicurata meglio di poi la via del ritorno alle navi.
Ma l’evento non rispose questa volta alle ribalde speranze.
I marinai, fatti ebbri dall’amor del bottino, si inoltrarono spensierati
troppo oltre, onde gli uomini del paese che, a poco a poco ripreso
animo, rivenivano ai disertati tetti, mentre prima non ne avevano
avuto pensiero — e sarebbe stato più agevole quando que’ ladri
erano sparpagliati per la campagna a rapinare il far loro resistenza e
toglierli di mezzo — allora solo avvisarono di attenderli al ritorno. E
come infatti venivano i classiarii a frotte e carichi di preda inverso le
navi, giunti sotto Pompei, si trovarono d’un tratto d’avere a fare co’
Pompejani medesimi fieramente irritati, i quali cogliendoli alla
sprovvista, così li malmenarono da salvarsene pochi dalla strage,
tutti rigurgitando quanto avevano involato, e salvandosi a mala pena
i superstiti sulle navi [35].
Ma se tale era l’animo dei Pompejani e dei consorti loro della
Campania verso i Romani dominatori, non si può dire che migliori
sentimenti nodrissero verso i Sanniti; perocchè quando in quel torno
di tempo vennero costoro dall’armi romane e da quelle dei
confederati campani congiunti insieme nuovamente e più
aspramente battuti, lasciando nelle mani de’ vincitori le ricchissime
loro armi, i Romani se ne servirono ad ornamento del foro; i
Campani fregiandone invece i gladiatori, a sollazzo ne’ loro
banchetti, presero da quel tempo ad appellare Sanniti i gladiatori
stessi; lo che se è testimonio di molto orgoglio, lo è ben anche di
grandissimo ed inestinguibil odio verso di essi.
Gli è tuttavia a’ 293 anni avanti Cristo che i Sanniti quasi affatto
cessarono ogni lotta con Roma; perocchè in questo tempo, dopo che
videro anche l’armi d’Etruria vinte e aggiunte quelle provincie come
serve al carro della romana grandezza, — quantunque siffatta umile
condizione venisse palliata col titolo di alleanza latina, — ebbe ad
andare a vuoto il supremo loro sforzo per la propria indipendenza.
Un esercito di trentamila e trecentoquaranta uomini raccolsero essi
in questo ultimo cimento, e sull’altare dapprima giurato fra orribili
imprecazioni: o difendere l’ultimo resto dell’italica libertà o morire, il
giuramento tennero imperterriti, perchè ad Aquilonia perirono tutti, e i
poveri avanzi di tanto coraggio e di tanta fede, riparati in una
caverna dell’Appennino, scoperti l’anno dopo, in numero di duemila
vennero col fuoco miseramente asfissiati e spenti.
Io, come ha già visto il lettore, ho divisa la storia di Pompei in due
parti: nella prima compresi il tempo in cui sta quell’êra che nella
storia di Roma si appella eroica, sebbene non sussistan ragioni di
designarla così per Pompei. Da’ fatti medesimi qui memorati e i quali
accusano i costanti propositi de’ Quiriti di conquista e d’estinzione di
libertà, è manifesto che anche a riguardo di Roma assai e assai
sarebbesi a dire e contrastare all’epoca il glorioso appellativo,
malgrado potesse pur l’Allighieri professarsi devoto alle gesta
Onde Torquato e Quinzio che dal cirro

Negletto fu nomato, e i Deci e i Fabi
Ebber la fama che volentier mirro [36];
io ne adottai ad ogni modo la durata e a divisione di lavoro, e perchè

gli avvenimenti che seguono entrano in una fase più certa e più
confortata dall’autorità di monumenti e scrittori degni di fede migliore.
Qui termina pertanto la mia prima parte, o periodo; come a questo
punto finisce la suddetta età eroica romana.
CAPITOLO III.
Storia.
PERIODO SECONDO
La legione Campana a Reggio — È vinta e giustiziata a

Roma — Annibale e la Campania — Potenza di Roma —
Guerra Sociale — Beneficj di essa — Lucio Silla assedia
Stabia e la smantella — Battaglia di Silla e Cluenzio sotto
Pompei — Minazio Magio — Cluenzio è sconfitto a Nola
— Silla e Mario — Vendette Sillane — Pompei eretto in
municipio — Silla manda una colonia a Pompei — Che e
quante fossero le colonie Romane — Pompei si noma
Colonia Veneris Cornelia — Resistenza di Pompei ai
Coloni — Seconda guerra servile — Morte di Spartaco —
Congiura di Catilina — P. Silla patrono di Pompei accusato
a Roma — Difeso da Cicerone e assolto — Ninnio Mulo —
I patroni di Pompei — Le ville a’ tempi di Roma — La villa
di Cicerone a Pompei — Augusto vi aggiunge il Pagus
Augustus Felix — Druso muore in Pompei — Contesa di
Pompejani e Nocerini — Nerone e Agrippina — Tremuoto
nel 65 che distrugge parte di Pompei.
L’autonomia della Campania non era, dopo questo tempo, che di

nome. Se più le sue città non subivano la Sannitica prepotenza,
doma oramai dalla forza preponderante dei Romani, all’autorità di
questi dovevano sempre nondimeno deferire. Era un’alleanza
onerosissima certo, e molto più che sembrasse non poter Roma
sussistere che guerreggiando, sitibonda e non saziata giammai di
conquista e di saccheggio, e fosse però necessità ne’ territorj
confederati di concorrere a rafforzarne gli eserciti.
Sbarazzatasi la via in quasi tutto il continente meridionale, le vittrici
aquile spiegavano il volo verso la Magna Grecia, ove la republica di
Taranto primeggiava d’industria e di marina, e verso la Sicilia. Noi
non ne seguiremo il corso, che non fa al mio còmpito, e più che di
Pompei e delle città sorelle m’avverrebbe di ritessere la romana
istoria, facile del resto, per tanto che ne fu scritto, a consultarsi;
noterò tuttavia che moltissimi delle città campane, insofferenti della
pressura quiritica, preferissero esulare dalla patria contrada e
bramosi di nuova stanza e di quel dominio che avevano perduto,
capitanati da un Decio Giubellio, occupassero Messina, invadessero
Reggio, e si piantassero formidabili prima agli abitanti di quelle terre,
poscia a’ Romani che ambivano recarle alla loro dominazione, e
finalmente a’ Cartaginesi che tentavano assalirne le coste, essi
medesimi fatti assalitori.
La legione campana, ingagliardita dai successi contro questi ultimi e
contro Pirro venuto dall’Epiro per cupidigia di nuovo impero, che
avevano costretto a levar da Reggio l’assedio, spinto avevano così
l’audacia da sorprendere Cortona e scannarvi il presidio romano,
diroccandovi la città. Ma quando i Romani presero possesso di
Taranto, che aveva in Italia chiamato Pirro a’ loro danni, puniti che
n’ebbero severamente i cittadini, non s’ebbero altro più a cuore,
quanto far sì che castigata pur fosse la perfidia della detta legione.
Fu commessa pertanto, nell’anno 482 di Roma (270 a. C.), la
punizione a Lucio Genucio, ch’era console con Cajo Quinzio;
ond’egli costrettala entro le mura di Reggio, vi pose intorno l’assedio,
e comunque ajutati dai Mamertini, egli alla sua volta soccorso da
Jerone, che teneva il principato di Siracusa, ebbe alla fine a
discrezione la città. Fatti allora giustiziare disertori e ladroni, che colà
s’erano rifugiati, i legionarj trasse a Roma, onde il Senato
deliberasse di loro sorte. E il Senato, contro l’avviso di Marco Fulvio
Flacco, tribuno della plebe, li dannò all’estremo supplizio: solo a
scemare l’odioso terrore di fatto così acerbo e la mestizia della plebe
dove fosse stato messo a morte in uno stesso tempo tanto numero
di gente, se ne trassero di prigione cinquanta al giorno, che battuti
prima colle verghe caddero poscia sotto la scure.
«Seguendo parecchi autori, — scrive il Freinsemio nel quinto libro
de’ supplementi liviani, al quale ho spiccato un tal fatto, — ho messo
che tutta la legione, cioè quattromila uomini, siano stati colpiti colla
scure in sulle piazze di Roma; stimo però più vero ciò che Polibio
riferisce, non esser caduti vivi nelle mani che trecento legionarj; il
rimanente aver preferito, combattendo disperatamente nella presa
della città, d’esser tagliati a pezzi, nessun di loro ignorando, che
dopo sì enormi delitti, non altro potessero, arrendendosi, aspettarsi
che maggiori crucci ed una morte a più grave ignominia congiunta.»
Non ricordan le storie che i Campani per lo innanzi avessero pugne
per conto proprio, e pur tacesi quindi di Pompei che anche nella
sunnarrata vicenda poco specialmente abbiam trovato nominata:
silenzio codesto ben avventuroso, poichè ogni città che allora si
meritasse dagli storici menzione, non l’ottenesse che da’ disastri ne’
quali fosse ravvolta. Solo si sa come dugento quindici anni prima di
Cristo, Annibale, il formidabile condottiero dell’armata cartaginese,
nella seconda Guerra Punica, che Livio chiama bellum maxime
memorabile omnium, e che fu difatto sanguinosissima ed ostinata, si
presentasse a’ confini della Campania e di qui tenesse in grande
sgomento la superba Roma. Il feroce Cartaginese desolò quelle città
della Terra di Lavoro che si tennero in fede de’ Romani, ma non
consta che nel novero di esse fosse Pompei; onde possa cavarsene
argomento ch’essa pure, non altrimenti che Capua, spalleggiasse
l’invasore straniero. Cessato da ultimo ogni rumore di questa guerra
colla vittoria di Roma, e ritornata pure la Campania nella sua
soggezione, le braccia de’ suoi abitanti vennero quindinnanzi
disposte dai Romani, nel cui dominio eran venuti, e dai quali del
resto vedeansi in ricambio accordato protezione contro assalti
nemici, provvedimenti di strade, canali e ponti ed utili parentadi.
Roma tra breve, cioè nell’anno 624 di sua fondazione e 130 avanti
Cristo, possedeva così quasi tutta l’Italia, oltre la Spagna e la Grecia,
e de’ quattro questori provinciali, fra cui venne dal Senato divisa,
quello residente a Cales comprendeva la giurisdizione sulla
Campania in un col Sannio, la Lucania ed i Bruzi: tal che Scipione
Emiliano, censore, quando al chiudersi del lustro, sacrificando,
doveva, secondo il costume, supplicare agli Dei l’ampliamento
dell’impero, narra Valerio Massimo, che a quella formula sostituisse
di suo capo queste parole: Grande e potente è abbastanza: supplico
i Numi di conservarlo eternamente.
Quanta ragione questo savio avesse in ciò chiedere ai Numi, la
chiarirono le cruentissime guerre intestine che successero di poi e i
danni che a Roma n’ebbero a conseguitare. Celebre è quella che
ebbe il nome di Guerra Sociale, e nella quale i Romani s’ebbero a
fronte Picentini e Marsi, Marrucini e Ferentani, Peligni e Campani,
Irpini, Apuli e Lucani e, più che tutti, gli irreconciliabili Sanniti, non
fiaccati da venti sconfitte e bramosi di vendicare il lungo servaggio.
Cajo Mario in questa lotta fraterna, altro de’ capitani che tanta gloria
in Africa e più ancora contro i Cimbri aveva conseguita, venne
accusato di lentezza, e non era per avventura che il cruccio di un
egregio di combattere contro Italiani, i quali avevano a scopo di
ottenere colla forza quello ch’egli voleva concesso di grazia; onde
alla fine si ritrasse spontaneo dal comando. Durò la guerra tre anni,
e si sommarono a meglio di trecentomila i periti in essa. Roma,
come sempre, la vinse; ma restò di beneficio almeno che venisse
proclamata l’eguaglianza di tutti gli Italiani, nè più vi fosse ostacolo
da’ federati ad essere cittadini, e venissero come tali ripartiti fra tutte
le trentacinque tribù di cui costituivasi la romana cittadinanza.
Questa legge, promossa da Mario e che gli procacciava il generale
favore, indarno venne dal suo grande antagonista Lucio Cornelio
Silla osteggiata.
Era stato questo Silla che in codesta Guerra Sociale combatteva per
Roma contro i Campani e i Sanniti, risvegliatisi ancora agli odj
antichi. Pompei fu pure tra le città ribellate, le quali a’ primordj della
generale conflagrazione ebbero favorevoli le sorti dell’armi. Ma la
discordia de’ capi e l’inesperienza le mutarono ben presto, e le
resero ad essi contrarie. Silla cinse Stabia di assedio — Stabia di
poco tratto discosta da Pompei ed oppido a que’ dì ragguardevole —
la prese e smantellò per guisa, che anche ai tempi di Plinio il
Vecchio, poco presso, cioè, alla sua totale rovina, più non offerisse
che l’aspetto di un villaggio.
Dall’alto delle sue mura riguardava Pompei la desolazione della
vicina città sorella e con qual cuore, pensi il lettore; perocchè ella
pure dovesse allora aspettarsi non dissimile fato, conscia dell’indole
efferata e crudele del suo vincitore. Disperando scongiurare il
pericolo, s’apprestarono animosi alla difesa i Pompejani.
E Lucio Silla non attese infatti di molto a volgere ad essi il pensiero;
perocchè toltosi a Stabia, venne a porsi sotto la loro città, che strinse
egualmente d’assedio, e ne attendeva agli approcci, allorchè
Cluenzio, generale de’ Sanniti, inavvertitamente giunto, s’accampa a
quattrocento passi da’ romani alloggiamenti con poderose forze.
Silla fa impeto contro di lui; è terribile il cozzo fra le avverse legioni,
ma ne è Silla respinto. Riordina allora le truppe e ritorna all’assalto
con maggiore accanimento e ne ottiene piena rivincita. Lo imita
Cluenzio ingrossando di nuovi ajuti le proprie fila, ed una terza volta
vengono alle mani i due eserciti, rompendo Silla le ostilità: ma
questa volta la sorte decide a pro’ dell’armi romane e Cluenzio
stesso, nella generale sconfitta del suo campo, rimane estinto
presso Nola, dove la foga della pugna aveva ambo gli eserciti
sospinti.
Vellejo Patercolo ci fa sapere a questo punto come Minazio Magio di
Ascoli, avolo suo, nipote di Decio Magio, ch’egli punto non esita a
chiamare il primo de’ Campani e celeberrimo e fedelissimo,
segnalasse fortemente la sua devozione a’ Romani, levando a sua
spesa una legione tra gli Irpini e combattendo a fianco prima di Tito
Didio, congiuntamente al quale ebbe a prender Ercolano, e quindi di
Lucio Silla in questo assedio di Pompei, impadronendosi poscia di
Cosa [37].
Non si trova nella storia del come i Pompejani allora si sottraessero
alla vendetta di Silla; forse questi rinunziò ad essi nella ambizione
del Consolato, la cui elezione si agitava nell’Urbe: da Nola, ove
trovavasi coll’esercito, egli allora accorse a Roma, prima a brigarsi
quell’onore e poscia a vendicare il torto che egli credeva a lui fatto
nell’affidarsi a Mario il supremo comando nella guerra, che aveasi ad
intraprendere contro Mitridate re del Ponto; onde ebbero a correre
rivi di sangue cittadino. Superfluo il narrare di Mario, profugo per
Italia e miserissimo, il suo ritorno nuovamente potente e la settima
sua elezione al consolato, le sue crudeli vendette e la morte: non lo
sarà forse il mentovare siccome il suo antagonista, veduto di qual
modo gli Italiani tutti si mostrassero propensi a Mario, migrasse
proscritto in Asia, dove conciliatesi le legioni, ne ottenne poscia il
comando, e in tre anni menata a buon fine una pericolosissima
guerra, non lasciando a quel barbaro re, com’ei disse, che la destra
mano, colla quale aveva firmato il macello di centomila Romani,
espilate quelle provincie con enormissime contribuzioni, ritornasse in
Italia.
Approdato a Brindisi, scrive al Senato enumerando le proprie
imprese e di rincontro i torti dalla patria ricevuti, e conchiude il
messaggio annunziando come tra breve ei comparirebbe alle porte
di Roma con un esercito vincitore a vendicare gli oltraggi, punire i
tiranni ed i satelliti loro.
Nè valsero pacifiche ambascerie a scongiurare la nuova sciagura e
neppure i centomila soldati oppostigli contro dai consoli Giunio
Norbano e Cornelio Scipione; perocchè le prime egli spregiasse e
l’esercito non reggessegli contro, in una parte sconfitto e nell’altra
scomposto dalla diserzione. Non farò qui il tristissimo quadro delle
vendette e proscrizioni sillane: la storia tenne conto di novemila
persone uccise, fra cui novanta senatori, quindici consolari e duemila
seicento cavalieri; lasciò onorata la memoria della condotta di que’ di
Norba in Campania, i quali piuttosto che arrendersi, ben conoscendo
l’animo spietato di Silla, per testimonio di Appiano, appiccarono il
fuoco alle case, e da uomini di cuore preferirono uccidersi gli uni gli
altri [38].
Le furie delle sue vendette caddero quindi in buona parte sulle città
italiane, le quali nel conflitto fra lui e Cajo Mario avevano per
quest’ultimo parteggiato, e se a Preneste erano morti dodicimila, se
Norba, comechè ancora fumanti i ruderi, vennero da lui spenti affatto
col sangue, se Populonia fu distrutta, se a Fiesole tolse ogni
speranza di risorgere fondando sulle rive dell’Arno una nuova città,
Fiorenza, se il Sannio seminò di ruine e di squallore, non poteva
certamente andare immune dalle ultrici sue folgori Pompei.
Allorquando erasi posto fine alla Guerra Sociale, come ad altre città,
così anche a Pompei ed Ercolano era stato accordato d’erigersi in
municipii, di reggersi, cioè, colle proprie leggi e proprii comizii,
conseguenza del diritto alla romana cittadinanza, comunque e leggi
e comizii dovessero essere sul modello di Roma; onde Cicerone
potesse affermare due patrie competere a’ municipii, l’una della
natura, l’altra della città; l’una di luogo, l’altra di diritto [39].
Abbiam veduto come a Silla, capo del partito nobilesco, fossero
spiaciute tutte queste concessioni, fatte ad iniziativa di Publio
Sulpicio tribuno e ad istigazione di Cajo Mario, come non ignoravasi
universalmente: facile è poi argomentare come più ancora spiacer
dovessero accordate a Pompei, dove al tempo che teneva il
comando militare, giusta quanto ho già detto, aveva trovato
gagliarda resistenza, ed era a lui riuscito malagevole il superarla.
Non appena pertanto il Senato, sulla proposta di Valerio Flacco, ligia
persona di Silla e da lui fatto eleggere ad interrè, acclamò, nello
spavento de’ sanguinosi spettacoli a cui aveva assistito, Cornelio
Silla medesimo dittatore, ciò che da ben cento venti anni non s’era
più visto accadere, esso, in odio del morto suo antagonista, ritogliere
a’ latini e a moltissime città italiche la romana cittadinanza,
conferendo invece cittadinanza e libertà a diecimila schiavi, che
assunsero il cognome suo di Cornelii, al nome proprio inoltre
aggiungendo quello di Felice, quasi i torrenti di sangue versato lo
avessero veramente reso tale, come poco dopo a’ due gemelli che
gli nacquero da Metella, volle imposti i nomi di Fausto e di Fausta.
Fra le città da lui disgraziate fu Pompei. Tre coorti di veterani vi
mandò come corpo di osservazione, impose un tributo d’uomini e di
pecunia e quasi ne confuse ed estinse il nome, tramutando il
municipio in colonia militare, questa volendo appellata Veneria,
desunto da Venere Fisica, che era la divinità protettrice della città, ed
anche Cornelia dalla illustre famiglia alla quale egli apparteneva.
Questo seguiva nell’anno ottantesimo avanti l’era volgare. Siffatto
nuovo reggimento politico di Pompei reclama che delle condizioni di
esso venga il lettore informato.
Vuolsi che Romolo inventasse il sistema delle colonie militari,
quando vinte le città o genti finitime, parte di queste volesse seco
condurre nell’Urbe e parte lasciasse pure in luogo, importandovi
uomini proprii, i quali per darsi alla coltura de’ campi che lor venivan
concessi, si dissero coloni. Le sedi, i campi e l’oppido stesso, se vi
fosse ragione a costituire i diritti, le forme assumevano quasi di
nuova repubblica, in guisa tuttavia che ogni cosa a Roma ed alla
città madre avesse riferimento.
Varia si volle l’utilità che dalle colonie ritraesse Roma.
Primieramente, dicevasi, venivano giovamento alla stessa città
principe ed alla troppa e superflua moltitudine; quindi agli stessi
nemici e sudditi, per quella civiltà che eravi necessariamente
importata; da ultimo la istituzione serviva a tenere in soggezione i
vinti e quelli che meglio ispiravano timore. Cresciuto l’impero, furono
le colonie di sfogo a plebe povera e gravosa, di premio a’ soldati
emeriti, o vecchi. Solevasi per lo più distinguere le colonie in altre di
Romano, altre di Latino ed altre di Italico diritto; dette talune patrizie
e tali altre equestri, a seconda costoro della maggiore dignità de’
cittadini e militi che le componevano.
Nondimeno anche gli scrittori più favorevoli a siffatto sistema
riconobbero come tiranni e violenti cittadini avessero ad abusare di
esso, mescolandovi l’ingiuria e l’inganno [40], e Cornelio Silla
medesimo citarono appunto, come quegli che non solo, non
altrimenti che s’era usato per lo addietro, i campi conquistati
all’inimico ebbe a distribuire, ma a concedere nella stessa Italia sedi
a que’ soldati che le avessero desiderate.
Or come fra questi scellerati abusi del sanguinario dittatore non
deesi annoverare quello praticato in odio de’ Pompejani, se la

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II. Indirect subsidiary control-connecting affiliation

III. Mutual ownership

IV. Income tax accounting for a business combination—consolidated tax returns

V. Income tax accounting for a business combination—separate tax returns

Vll. Operating loss carryforwards

1. A father-son-grandson relationship is a specific type of ownership configuration often

2. In a business combination having an indirect ownership pattern, at least one company is in

3. Able—100% of income accrues to the consolidated entity (as parent company).

7. A Damson's accrual-based income:

Crimson's accrual-based income:

Bassett's accrual-based income:

8. C Icede's accrual-based income:

Healthstone's accrual-based income:

Total noncontrolling interest = ($32,000 + $79,600) = $111,600

9. D Juvyn's operational income .......................................................... $50,000

10. A Equity income (60% of $200,000) .................................................. $120,000

11. C Unrealized Gain:

12. A Recognition of this gain is not required on a consolidated tax return.

Consideration transferred ....................................... $420,000

14. (35 Minutes) (Series of reporting and consolidation questions pertaining to a

a. Investment in Limb $252,000

Dividends received 2010 (14,000)

b. Leaf—2010 income (revenues minus expenses) $10,000

Limb—2009 operating income $40,000

c. Consolidated sales (total for the companies) $1,260,000

d. Noncontrolling interest in income of Leaf

Noncontrolling interest in income of Limb:

e. 2010 Realized income of Limb (prior to accounting

2011 Realized income of Limb (prior to accounting

f. In b., an adjustment of $50,610 was made to the beginning 2011 retained

a. Consideration transferred by Uncle ............................. $500,000

Income reported by Nephew—2011 .............................. $50,000

plus the $6,000 in dividends].

17. (35 Minutes) (Consolidated income for a father-son-grandson combination.)

a. Mesa's operating income $250,000

b. Valley's operating income $140,000

Mesa’s operating income $250,000

17. (30 Minutes) (Consolidated income figures for a connecting affiliation)

Operational income (sales minus cost of goods sold and

TOTAL NONCONTROLLING INTERESTS: $24,620 ($11,400 + $13,220)

18. (12 Minutes) (Acquisition accounting for a subsidiary’s operating loss

a. Consideration transferred 1/1/11 $900,000

Software licensing agreements $750,000

b. Consideration transferred 1/1/11 $900,000

b. On separate returns, the unrealized gains are reported as taxable income.

DUE TO GOVERNMENT: (separate returns)

Currently payable to government ........................... $30,000

Total income tax payable: Current = $67,800 ($37,800 + $30,000)

a. $260,000 ($650,000 × 40%)

b. $260,000 ($650,000 × 40%)

c. $296,000 ($96,000 + $200,000)

Equity income of subsidiary .......................................... $100,800

Piranto income 2011 (sales less expenses) ...................................... $300,000

Taxable income .............................................................. $300,000