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Advanced
Accounting
Fifteenth Edition

Joe B. Hoyle
Associate Professor of Accounting
Accounting Teaching Fellow
Robins School of Business
University of Richmond

Thomas F. Schaefer
Professor Emeritus of Accountancy
Mendoza College of Business
University of Notre Dame

Timothy S. Doupnik
Distinguished Professor Emeritus of Accounting
Darla Moore School of Business
University of South Carolina
 Final PDF to printer

ADVANCED ACCOUNTING

Published by McGraw Hill LLC, 1325 Avenue of the Americas, New York, NY 10019. Copyright ©2024 by
McGraw Hill LLC. All rights reserved. Printed in the United States of America. No part of this publication may
be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without
the prior written consent of McGraw Hill LLC, including, but not limited to, in any network or other electronic
storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the
United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 LWI 28 27 26 25 24 23

ISBN 978-1-266-26646-1
MHID 1-266-26646-1

Cover Image: Design Pics / Kristy-Anne Glubish

All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does
not indicate an endorsement by the authors or McGraw Hill LLC, and McGraw Hill LLC does not guarantee the
accuracy of the information presented at these sites.

mheducation.com/highered

hoy66461_fm_ise.indd ii 09/30/22 03:16 PM

ISTUDY
To our families
The real purpose of books is to trap the
mind into doing its own thinking.
—Christopher Morley
About the Authors
Joe B. Hoyle, University of Richmond
Joe B. Hoyle is an associate professor of accounting at the Robins School of Business at the
University of Richmond. He is also an Accounting Teaching Fellow. In 2015, he was the first
recipient of the J. Michael and Mary Anne Cook Prize for undergraduate teaching. The Cook
Prize is awarded by the American Accounting Association and “is the foremost recognition of
an individual who consistently demonstrates the attributes of a superior teacher in the disci-
pline of accounting.” In 2019, former students raised money to create an Accounting T­ eaching
Fellowship, which will be renamed the “Joe Hoyle Accounting Teaching F ­ ellowship” on his
Courtesy of Joe B. Hoyle eventual retirement. He has authored a book of essays titled Tips and Thoughts on Improv-
ing the Teaching Process in College, which is available at https://facultystaff.richmond
.edu/~jhoyle/documents/book-teaching-x.doc.pdf. His blog, Teaching—Getting the Most
from Your Students, at http://joehoyle-teaching.blogspot.com/ was named the Accounting
Education Innovation of the Year for 2013 by the American Accounting Association.

Thomas F. Schaefer, University of Notre Dame

Thomas F. Schaefer is a professor emeritus of accountancy at the University of Notre Dame.
He has written a number of articles for scholarly journals such as the Accounting Review,
Journal of Accounting Research, Journal of Accounting & Economics, Accounting ­Horizons,
and others. His primary teaching and research interests are in financial accounting and report-
ing. Tom is a past president of the American Accounting Association’s Accounting P ­ rogram
Leadership Group. He received the 2007 Joseph A. Silvoso Faculty Merit Award from
the Federation of Schools of Accountancy and the 2013 Notre Dame Master of Science in
Courtesy of Thomas F. Schaefer Accountancy Dincolo Outstanding Professor Award.

Timothy S. Doupnik, University of South Carolina

Timothy S. Doupnik is a distinguished professor emeritus of accounting at the University of
South Carolina. His primary teaching interests are in financial and international accounting.
Tim has published extensively in the area of international accounting in journals such as the
Accounting Review; Accounting, Organizations, and Society; Abacus; International Journal
of Accounting; and Journal of International Business Studies. Tim is a past president of the
American Accounting Association’s (AAA) International Accounting Section and a recipient
of the section’s Outstanding International Accounting Educator Award. He is a coauthor of the
paper that received the AAA’s Notable Contribution to the Auditing Literature Award in 2019.
Courtesy of Timothy S. Doupnik

v
Advanced Accounting, 15e, Stays Current

Overall—this edition of the text provides relevant and up-to-date

accounting standards references to the Financial Accounting Standards
Board (FASB) Accounting Standards Codification® (ASC). We’ve also
added new Hint Videos, Integrated Excel problems, and Data Analytics
materials available only in Connect!

Chapter Changes for Advanced ∙ Revised and streamlined the “Does GAAP Under-
value Post-Control Stock Acquisitions?” discussion
Accounting, 15th Edition: Question.
∙ Revised several end-of-chapter problems (including
the conversion of eight multiple choice questions to
Chapter 1 open-ended problems).
∙ Included a new step-acquisition case and an updated
∙ Updated real-world references and examples. Costco noncontrolling interest case.
∙ Revised several end-of-chapter problems.

Chapter 5
Chapter 2 ∙ Revised end-of-chapter problems including the con-
∙ Three new business combinations are discussed in version of six multiple-choice questions to open-
terms of motivations to combine Goodyear Tire and ended problems.
Rubber-Cooper Tire and Rubber, Google-Fitbit, and ∙ Included a new end-of-chapter problem that focuses
Uber-Postmates. on intra-entity transfers (inventory and equipment)
∙ Updated real-world references and examples. for a 100 percent-owned subsidiary.
∙ Revised several end-of-chapter problems and added
three new business combination cases.
Chapter 6
∙ Updated real-world references and examples.
Chapter 3 ∙ Revised, clarified, and simplified the section on consol-
idated earnings per share (EPS). The EPS example now
∙ Added a special On the Horizon discussion titled includes only the effect of subsidiary convertible bonds
“FASB Considers Goodwill Amortization.” for consideration of the subsidiary’s effect on diluted
∙ Updated real-world references and examples. EPS. The example is not only simplified but provides
∙ Revised several end-of-chapter problems. In particu- improved alignment with end-of-chapter problems.
lar, previous asset allocations to customer-related ∙ Revised end-of-chapter problems including the con-
items in acquisitions were changed to other intangi- version of three multiple-choice questions to open-
ble asset categories in light of proposed FASB action. ended problems.
∙ Updated and revised end-of-chapter impairment
analysis case.
Chapter 7
Chapter 4 ∙ Adopted the term parent-child-grandchild to replace
the previous use of the father-son-grandson descrip-
∙ Updated real-world references and examples. tion for indirectly controlled entities through mul-
∙ Revised end-of-chapter problems and cases. tiple layered ownership configurations.
vi
as the Accounting Profession Changes

∙ Converted the previous partial equity method par- ∙ Added several new multiple-choice format prob-
ent-child-grandchild configuration examples to full lems to replace those converted to a requirement
equity method. format.
∙ Updated real-world references and examples. ∙ Changed hypothetical company names in several
∙ Revised/updated several end-of chapter problems end-of-chapter problems to provide more diversity.
and cases to align the new focus on the equity method ∙ Made a variety of changes to the historical exchange
for multiple layered ownership configurations. rates internet case, including changing the company
name, locations of customers, and so on.

Chapter 8
∙ Updated references to actual company practices and
excerpts from annual reports. Chapter 10
∙ Changed the real-world companies used to demonstrate ∙ Replaced merger-and-acquisition bullet items at the
disclosures related to operating segments, aggregation beginning of this chapter with updated information
of segments, interim information, and seasonal items. from a different set of companies.
∙ Added information related to goodwill disclosures ∙ Updated information about countries currently meet-
required by the FASB to be reported by operating ing the definition of highly inflationary economy.
segment. ∙ Updated real-world references, including examples of
∙ Added two On the Horizon sections summarizing company practices and excerpts from annual reports.
FASB projects on segment reporting and on interim ∙ Rephrased most bullet items in the section “Inter-
reporting. national Accounting Standard 21—The Effects of
∙ Changed several multiple-choice format end-of- Changes in Foreign Exchange Rates.”
chapter problems to a requirement format. ∙ Deleted a quote related to determining the functional
∙ Changed hypothetical company names in several currency in “Comparison of the Results from Apply-
problems to provide more diversity. ing the Two Different Methods.”
∙ Eliminated one of the research cases at the end of the ∙ Converted several multiple-choice format problems
chapter. at the end of the chapter to a requirement format.
∙ Changed one of the requirement companies in a ∙ Added one new multiple-choice problem.
remaining research case and one of the companies in ∙ Changed fictitious company names in several prob-
an analysis case. lems and cases to increase diversity.

Chapter 9
Chapter 11
∙ Replaced one of the real-world example companies
used in the “Introduction” to demonstrate the signifi- ∙ Updated real-world references, including excerpts
cance of export sales and foreign currency hedging from annual reports.
for some entities. ∙ Updated exhibits listing IFRS Standards and coun-
∙ Updated real-world references including excerpts tries’ use of IFRS Standards.
from annual reports. ∙ Updated information on the use of full IFRS and
∙ Changed the exchange rate in the fictitious Interna- IFRS for SMEs.
tional Company illustration included in “Derivatives ∙ Rewrote the discussion related to the relevance of
Accounting” to be more consistent with the current IFRS for U.S. accountants within “SEC Recognition
U.S. dollar/Mexican peso exchange rate. of IFRS.”
∙ Added a discussion question “Is Bitcoin a Foreign ∙ Added an On the Horizon section summarizing the
Currency?” IASB’s project on general presentation and disclosure.
∙ Changed several multiple-choice format problems at ∙ Made “Conversion of IFRS Financial Statements to
the end of the chapter to a requirement format. U.S. GAAP” a major heading.
vii
Chapter 12 the City of Greensboro, and the City of Las Vegas.
This information helps students to see real-world
∙ Updated information for the SEC divisions and examples of financial reporting in its current form.
offices due to renaming and reorganization. ∙ Updated all references from the old terminology
∙ Revised SEC and PCAOB fees and budgets amounts. (Comprehensive Annual Financial Report) to the
∙ Updated securities exempt from registration for cur- new terminology (Annual Comprehensive Finan-
rent thresholds. cial Report).
∙ Removed Regulation D—Rule 505 due to SEC
repeal and added Regulation Crowdfunding.
∙ Revised examples and end-of-chapter problems and Chapter 17
cases.
∙ Provided discussion of GASB’s current project to
∙ Revised references as appropriate.
update the financial reporting model for state and
local governments.
∙ Updated references to the financial statements of
Chapter 13 state and local governments such as the City of Los
Angeles, the City of Buffalo, the City of Atlanta, the
∙ Revised references to include companies that have
City of Detroit, and the City of Boston.
recently experienced bankruptcy such as J.C. Penney,
Neiman Marcus, GNC, and J. Crew. ∙ Created a completely new illustration of the financial
statements for a public college or university to help
∙ Expanded the discussion of organizations such as
students better understand the meaning and structure
Purdue Pharma that use the bankruptcy process as
of the reporting process.
a means of addressing massive obligations resulting
from lawsuits.

Chapter 18
Chapter 14 ∙ Rewrote sections of the chapter as a result of
Accounting Standards Update 2019-03, Updat-
∙ Updated real-world references. ing the Definition of “Collections”; Accounting
∙ Revised end-of-chapter problems, including the Standards Update 2019-06, Extending the Private
conversion of six multiple-choice questions to open- Company Accounting Alternatives on Goodwill and
ended problems. Certain Identifiable Intangible Assets to Not-for-
Profit Entities; and Accounting Standards Update
2020-07, Presentation and Disclosures by Not-for-
Chapter 15 Profit Entities for Contributed Nonfinancial Assets.
∙ Updated references to the financial statements of
∙ Changed the names of fictitious partners in sev- numerous private not-for-profit entities such as The
eral illustrations, discussion questions, and end-of-­ Museum of Modern Art, ChildFund International,
chapter problems and cases to add diversity. United Way Worldwide, Georgetown University,
∙ Converted several multiple-choice format problems and the American Heart Association.
to a requirement format.

Chapter 19
Chapter 16 ∙ Updated tax code references, numbers, and statistics.
∙ Updated numerous references to the financial state- ∙ Revised references as appropriate.
ments of a wide variety of state and local govern- ∙ Revised end-of-chapter material reflecting changes
ments such as the City of Houston, the City of Dallas, from the chapter.

viii
Students Solve the Accounting Puzzle

The approach used by Thinking Critically

Hoyle, Schaefer, and With this text, students gain a well-balanced appreciation
Doupnik allows students of the accounting profession. As Advanced Accounting,
15e, introduces them to the field’s many aspects, it often
to think critically about focuses on past controversies and present resolutions. The
accounting, just as they text shows the development of financial reporting as a
will in their careers and product of intense and considered debate that continues
today and will in the future.
as they prepare for the
CPA exam. Read on to Readability
understand how students The writing style of the 14 previous editions has been
will succeed as accounting highly praised. Students easily comprehend chapter con-
cepts because of the conversational tone used throughout
majors and as future Revised Pages
the book. The authors have made every effort to ensure that
CPAs by using Advanced the writing style remains engaging, lively, and consistent.
Accounting, 15e.
Consolidation of Financial Information 41

EXHIBIT 2.1 Recent Notable Business Combinations Real-World Examples

Acquirer Target
Students are better able to relate what
Deal Value
S&P Global IHS Markit (United Kingdom) $ 44.0B
T-Mobile Sprint they learn to what they will encounter in the
$ 40.8B
Analog Devices Maxim Integrated Products $ 27.9B
Salesforce.com Slack Technologies
business world after reading these frequent
$ 27.7B
Microsoft
Intuit
Nuance
Mailchimp
examples. Quotations, articles, and illustra-
$ 20.0B
$ 12.0B
Merck & Company Acceleron Pharma tions from Forbes, the Wall Street Journal,
$ 11.5B
Nvidia Mellanox $ 7.0B
Johnson & Johnson Momenta Pharmaceuticals Time, and Bloomberg BusinessWeek are
$ 6.5B
Verizon Communications
Cisco
Tracfone Wireless
Acacia Communications
incorporated throughout the text. Data have
$ 6.2B
$ 4.5B
Uber Technologies Postmates been pulled from business, not-for-profit, and
$ 3.9B
Goodyear Tire & Rubber Company Cooper Tire & Rubber Company $ 3.1B First Pages
Google Fitbit government financial statements as well as
$ 2.1B
Costco Wholesale Corp. Innovel Solutions $ 1.0B
Peloton Interactive Precor official pronouncements.
$ 412.0M

186 Chapter 4
As an example, Oracle’s acquisition of Sun Microsystems creates synergies by enabling Ora-
cle to integrate its software product lines with Sun’s hardware specifications. The acquisition
further allows Oracle to offer complete systems made of chips, computers, storage devices,
Discussion Questions
and software with an aim toward increased efficiency and quality.2 Other cost savings result-
ing from elimination of redundant processes, such as data processing and marketing, can
Discussion Question
make a single entity more profitable than the separate parent and subsidiary had been in the
past. Such synergies often accompany business combinations. This feature facilitates student understand-
Although no two business combinations are exactly alike, many share one or more of the
DOES
following characteristics that GAAP UNDERVALUE
potentially POST-CONTROL STOCK ACQUISITIONS?
enhance profitability:
ing of the underlying accounting principles at
∙ Vertical integrationAtofaone
recent
firm’sboard
outputofand
directors
another meeting, Margaret
firm’s distribution or Liu,
work
Chief
further
in particular reporting situations. Simi-
Executive Officer of StepUp Corpo-
processing.
∙ Cost savings throughration, discussed
elimination her company’s
of duplicate post-control
facilities lar to
and staff. step acquisition mini cases,
in Escalator, these questions help explain
Inc., as follows:
∙ Quick entry for new and existingprovides
Escalator products into domestic and
an example foreign
of how markets. the
accounting fails issues
to captureatthe hand in practical terms. Many
gap between
∙ Economies of scale allowing
book valuegreater efficiency
and andLet
fair value. negotiating power.
me explain. ..
∙ This year
The ability to access financing at moreweattractive
purchased additional
rates. shares
As firm size in our
increases, times,
subsidiary
negotiating these cases
Escalator, are designed to demon-
increasing
power with financial institutions
our ownership can increase
to 90%also.(up from the 75% we acquired stratea fewtoyears
students
ago). Whatwhy a topic is problematic
I find
∙ puzzling
Diversification of business risk.is that the GAAP rules require us to report the current year’s purchase not at
what we paid, but at an amount based on the current and worth
book considering.
value of our original 75%
Business combinations also occur because many firms seek the continuous expansion of their
organizations, often intopurchase
diversifiedwhich
areas. is less than
Acquiring our purchase
control over a vastprice. Ourofaccountants
network differ- tell me that if we
ent businesses has been didn’t already
a strategy own
utilized by the original
a number 75%, we would
of companies record
(sometimes the additional
known as 15% investment ix
at our
conglomerates) for decades. $1.5into
Entry million cost.
new industries is immediately available to the parent
without having to construct facilities, develop products, train management, or create market
recognition. Many corporations have successfully employed this strategy to produce huge,
highly profitable organizations. Unfortunately, others discovered that the task of managing a
with 15th Edition Features

McGraw Hill and UWorld are dedicated to supporting every accounting student along their journey, ultimately helping
them achieve career success in the accounting profession.
In partnership with UWorld, a global leader in education technology, we provide students a smooth transition from the
accounting classroom to successful completion of the CPA Exam. While many aspiring accountants wait until they have
completed their academic studies to begin preparing for the CPA Exam, research shows that those who become familiar
with exam content earlier in the process have a stronger chance of90successfully
Chapter 2 passing. Accordingly, students using these
McGraw Hill materials will have access to the highest quality CPA Exam task-based simulations from UWorld, with
Appendix 2B Problems
expert-written explanations and solutions. All questions are either LO
directly
2-10 from the AICPA
39. Whator are modeled
is pushdown on AICPA
accounting?
questions that appear in the exam. a. A requirement that a subsidiary must use the same accounting principles as a p
For more information about the full UWorld CPA Review program, exam requirements, and exam content, visit https://
b. Inventory transfers made from a parent company to a subsidiary
c. A subsidiary’s recording of the fair-value allocations as well as subsequent am
accounting.uworld.com/cpa-review/partner/university/. d. The adjustments required for consolidation when a parent has applied the e
accounting for internal reporting purposes
LO 2-10 40. On May 1, Burns Corporation acquired 100 percent of the outstanding ownership s
Corporation in exchange for $710,000 cash. At the acquisition date, Quigley’s boo

End-of-Chapter Materials
Revised
werePages
as follows:

Book Values
As in previous editions, the end-of-chapter material remains a strength Cash
of the. . . . . .text.
. . . . . . . .The
. . . . . . .sheer
. . . . . . . . . num-
........... $ 95,000

ber of questions,
66 Chapter 2
problems, and Connect assignments test and, therefore,
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
expand the students’
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
200,000
210,000
knowledge of chapter concepts. Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and equipment (net) . . . . . . . . . . . . . . . . . . . .
130,000
270,000
development is recognized as an asset in business combinations and is subject to subsequent
Patented technology . . . . . . . . . . . . . . . . . . . . . . . . . . . –0–
“Develop Your Skills”3. asks questions that address the four skills students
impairment reviews.
need
Total
If the consideration transferred for an acquired firm exceeds the total fair value of the acquired
assets .to
. . . .master
. . . . . . . . . . . .to
. . . .pass
............ $905,000

the CPA exam: Research, firm’sAnalysis, Spreadsheet,

net assets, the residual and
amount is recognized in Communication. An
Accounts
the consolidated financial statements icon
as indicates
. . . . . . . . . . . . .when
Revised Pages
payable ................ $120,000
goodwill, an intangible asset. When a bargain purchase occurs, individual assets and Long-term
liabil- liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510,000
these skills are tested. ities acquired continue to be recorded at their fair values, and a gain on bargain purchase
Common is stock ($5 par value) . . . . . . . . . . . . . . . . . . . 210,000
recognized. Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . .
90,000
76 Chapter 2
4. Particular attention should be given to the recognition of intangible assets in business Retained combina- earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(25,000)
EXHIBIT 2.10
Smallport Company Balance Sheet at January tions.1 An intangible asset must be recognized in an acquiring firm’s financial statementsTotal if the
liabilities and stockholders equity . . . . . . . . . $905,000
Pushdown Accounting—
Date of Acquisition Current assets . . . . . . . . . . . . . . . . . . . . . . . asset . . . . . . . .arises
. . . . . . . . .from
. a legal or
$ contractual
300,000 right (e.g., trademarks, copyrights, artistic materials, roy-
Computers and equipment . . . . . . . . . . . . alty . . . . . . agreements).
............ If the intangible asset does not represent a legal or contractual right, the intan-
600,000
Capitalized software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000
Customer contracts . . . . . . . . . . . . . . . . . . . gible . . . . . . . . will
. . . . . . .still
. . . be recognized
Burns directs Quigley to seek additional financing for expansion through a new
if it is capable of being separated from the firm (e.g., unpatented
700,000
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . technology,
. . . . . . . . . . . . . . . . . databases).
. 70,000 issue. Consequently, Quigley will issue a set of financial statements separate from
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,870,000 parent to support its request for debt and accompanying regulatory filings. Quigle
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (250,000)
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (100,000)
pushdown accounting in order to show recent fair valuations for its assets.
Additional paid-in capital excess over par . . . . . . . . . . . . . . . . . (20,000) Prepare a separate acquisition-date balance sheet for Quigley Corporation
Additional paid-in capital from pushdown accounting . . . . . . . (2,500,000)
Retained earnings, 1/1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –0–
accounting.
Comprehensive
Total liabilities and equities . . . . . . . .(Estimated
. . . . . . . . . . . . . . . Time:
. . . . . . . 45 to 65 Minutes)$ 2,870,000The following are the preacquisition account balances of Miller

Company and Richmond Company as of December 31. The fair values of Richmond Company’s assets
Illustration and liabilities
in Smallport’sare alsobalance
listed.
Develop Your Skills
Note that the values for each asset and liability separate sheet are identical to
those reported in BigNet’s consolidated acquisition-date balance sheet.

Internal Reporting
Pushdown accounting has several advantages for internal reporting. For example, it simplifies the con-
Problem solidation process. If the subsidiary enters the acquisition-date fair value allocations into its records,
FASB ASCRichmond
Miller RESEARCHRichmond AND ANALYSIS CASE—
worksheet Entry A (to recognize the allocations originating from the fair-value adjustments) is not Consolida
Company Company Company
needed. Amortizations of the excess fair-value allocation (see Chapter 3) would be incorporated in
subsequent periods as well. CONSIDERATION
Book Values Book Values
ORFair
COMPENSATION?
Values
Despite some simplifications to the consolidation process, pushdown accounting does not address
the many issues in preparing consolidated financial statements that appear in subsequent chapters of 12/31 12/31 12/31
11. Sloane, Inc., issues 25,000 shares of its own common stock in exc
this text. Therefore, it remains to be seen how many acquired companies will choose to elect pushdown AutoNav Company agrees to pay $20 million in cash to the four former owners of Eas
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . .
accounting. For newly acquired subsidiaries that expect to issue new debt or eventually undergo an
initial public offering, fair values may provide investors with a better understanding of the company.
........ CPA
$ 600,000
skills
$ 200,000 of
shares of Benjamin Company. Benjamin will remain a separately in
$ its200,000
assets and liabilities. These four owners of Easy-C developed and patented a tech
In summary, pushdown accounting providesReceivables . . . subsidiary
a newly acquired . . . . . .the
. . option
. . . .to. revalue
. . . . .its.
........ 900,000 300,000 time 290,000 Sloaneofrecord
monitoring traffic the issuance
patterns on theofnation’s
these shares?
top 200 frequently congested high
assets and liabilities to acquisition-date fair values in its separately reported financial statements. This
valuation option may be useful when the Inventory.
parent expects to .offer
. . .the. .subsidiary
. . . . . shares
. . . .to. the
. . public
. . . .fol-
..
........ 1,100,000 600,000 plans820,000
12. To obtain
to combine the newall technology
of the stock
with of
its Molly, Inc., Harrison
existing global positioningCorporation
systems and
lowing a period of planned improvements. Buildings and equipment (net) . . . when
Other benefits from pushdown accounting may arise
the subsidiary plans to issue debt and needs its separate financial statements to incorporate acquisition-
...
........ 9,000,000 800,000 900,000
ing substantial revenue
Harrison increase.
had to pay $98,000 to lawyers, accountants, and a stoc
Unpatented technology . . .reports.
......... ........ –0– –0– As500,000
partwith
of the acquisition contract, AutoNav also agreesof tothis
paybusiness
additional amoun
date fair values and previously unrecognized intangibles in their stand-alone financial
services rendered during the creation combin
In-process research and development . . . . . . . –0– –0– owners 100,000
upon achievement of certain financial goals. AutoNav will pay $8 million to
Questions What is a business combination? Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . (400,000) (200,000)
$56,000
(200,000)
in costs associated with the stock issuance. How will these
1.
owners of Easy-C if revenues from the combined system exceed $100 million over the
2. Describe the concept of a synergy. What are some examples of possible synergies in business
combinations? Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,400,000) (1,100,000) (1,100,000)
AutoNav estimates this contingent payment to have a probability adjusted present valu
3. Describe the different types of legal Totals. . .that
arrangements . . .can. . take
. . . place
. . . .to. create
. . . . a. .business
............ $ 7,800,000 $ 600,000 $1,510,000
The four former owners have also been offered employment contracts with AutoN
combination.
system integration and performance enhancement issues. The employment contracts
Common
4. What does the term consolidated financial statementsstock—$20
mean?
5. Within the consolidation process, what is the purpose of a worksheet?
Common stock—$5 par value . . . . . .
par value . . . . . ........
........
Problems
$ (2,000,000)
$ (220,000)
1. Which of the following does not represent a primary motivation for
service periods, have nominal salaries similar to those of equivalent employees, and
6. Jones Company obtains all of the common stock of Hudson, Inc., by issuing 50,000 shares of its a. Combinations
sharing component over the nextarethree
oftenyears
a vehicle to accelerate
(if the employees growth
remain andcompan
with the comp
own stock. Under these circumstances, Additional
why might the paid-in
determination capital . . . for
of a fair value . . the
. . consid-
.... ........ (900,000)
LO 2-1 (100,000)
eration transferred be difficult? estimates b.to have
Costa savings
current faircanvalue of $2 million.
be achieved The four
through former owners
elimination of Easy-Cfas
of duplicate
7. What is the accounting valuation Retained earnings,
basis for consolidating assets and1/1. . . . . .in. a. .business
liabilities .... ........ (2,300,000) (130,000)
on as employees of AutoNav for at least three years to help achieve the desired financi
combination? Revenues . . . . . . . . . . . . . . . . . . . . . . . . ........ (6,000,000) (900,000) c. Synergies may be available through quick entry for new and exis
8. How should a parent consolidate its subsidiary’s revenues and expenses?
Expenses . . . . . . . . . . . . . . . . . . . . . . . .
9. Morgan Company acquires all of the outstanding shares of Jennings, Inc., for cash. Morgan trans-
........ 3,400,000 750,000 d. Larger firms are less likely to fail.
Totals.
fers consideration more than the fair value . . . . .net. .assets.
of the company’s . . . How
. . . should
. . . . the
. . payment
. . . . .in. ........ $ (7,800,000) $ (600,000)
excess of fair value be accounted for in the consolidation process? LO 2-2 2. Which of the following is the best theoretical justification for conso
10. Catron Corporation is having liquidity problems, and as a result, it sells all of its outstanding stock
Note: Parentheses indicate a credit balance.
to Lambert, Inc., for cash. Because of Catron’s problems, Lambert is able to acquire this stock at a. In form, the companies are one entity; in substance, they are sep
x less than the fair value of the company’s net assets. How is this reduction in price accounted for
within the consolidation process?
Additional Information (not reflected in the preceding figures)
∙ On December 31, Miller issues 50,000 shares of its $20 par value common stock for
outstanding shares of Richmond Company. hoy98482_ch02_039-092.indd 90

∙ LO 2-3
hoy98482_ch02_039-092.indd 76
if certain profit projections 07/13/22
are realized
02:51 PM
over the next three years. Miller calculates the a. A merger approved by the Securities and Exchange Commission
Connect Accounting for Advanced

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xii
Acknowledgments
We could not produce a textbook of the quality and scope of Advanced Accounting without
the help of a great number of people. Special thanks go to the following:
∙ Stacie Hughes of Athens State University for her contributions to Chapters 12 and 19
and corresponding Solutions Manual files.
∙ Gregory Schaefer for his Chapter 2 descriptions of recent business combinations.
∙ Additionally, we would like to thank John Abernathy of Kennesaw State University, for
updating and revising the PowerPoint presentations; Robert J. Knisley of Wheaton College
and Dwayne Powell of Arkansas State University for contributing to the Integrated Excel
Exercises; Eric Weinstein of SUNY Suffolk for contributing to the Data Analytics materi-
als; Stacie Hughes for updating the test bank; Mark McCarthy of East Carolina University
and Beth Kobylarz of Accuracy Counts for checking the text, Solutions Manual, and test
bank for accuracy; Barbara Gershman of Northern Virginia Community College for check-
ing the PowerPoints, Beth Kobylarz and Teri Zuccaro for their Connect accuracy reviews.
We also want to thank the many people who completed questionnaires and reviewed the
book. Our sincerest thanks to them all:
John Abernathy, Kennesaw State Daniel Neely, University of
University Wisconsin—Milwaukee
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University Luis Plascencia, Harold Washington
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University Vernon Stanger, Trine University
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Marina Grau, Houston Community College Urbana—Champaign
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Arkansas William D. Stout, University of Louisville
Shuoyuan He, Tulane University Inho Suk, SUNY—Buffalo
Barry Hettler, Ohio University Ian A. Van Deventer, Spalding University
Yongtao Hong, North Dakota State Cammy Wayne, Harper College
University James Webb, University of
Stacie Hughes, Athens State University California—Berkeley
Marianne James, California State Arthur Wharton, Virginia State University
University, Los Angeles Jan Williams, University of Baltimore
Sehan Kim, University of Houston—Clear Hannah Wong, William Paterson University
Lake Sung Wook Yoon, California State
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University—Minnesota Nancy Yuen, Saint Mary’s College of
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We also pass along a word of thanks to all the people at McGraw Hill Education who par-
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we appreciate their efforts.
xiii
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Brief Contents
About the Authors v 10 Translation of Foreign Currency Financial
Statements 477
1 The Equity Method of Accounting for 11 Worldwide Accounting Diversity and
Investments 1 International Standards 537
2 Consolidation of Financial 12 Financial Reporting and the Securities and
Information 39 Exchange Commission 591
3 Consolidations—Subsequent to the Date of 13 Accounting for Legal Reorganizations and
Acquisition 93 Liquidations 617
4 Consolidated Financial Statements and 14 Partnerships: Formation and Operation 667
Outside Ownership 159 15 Partnerships: Termination and
5 Consolidated Financial Statements—Intra- Liquidation 705
Entity Asset Transactions 215 16 Accounting for State and Local Governments
6 Variable Interest Entities, Intra-Entity (Part 1) 737
Debt, Consolidated Cash Flows, and Other 17 Accounting for State and Local Governments
Issues 265 (Part 2) 797
7 Consolidated Financial Statements— 18 Accounting and Reporting for Private
Ownership Patterns and Income Taxes 321 Not-for-Profit Entities 861
8 Segment and Interim Reporting 365 19 Accounting for Estates and Trusts 919
9 Foreign Currency Transactions and Hedging
Foreign Exchange Risk 407 INDEX 953

xvi
Contents
About the Authors v Google and Fitbit 42
Uber and Postmates 43
Business Combinations, Control, and Consolidated
Chapter One Financial Reporting 43
The Equity Method of Accounting for Business Combinations—Creating a Single Economic
Investments 1 Entity 43
Control—An Elusive Quality 45
Why Do Business Firms Invest in the Equity Shares of
Consolidation of Financial Information 46
Other Business Firms? 1
The Reporting of Investments in Corporate Equity Financial Reporting for Business Combinations 47
The Acquisition Method 47
Securities 2
Consideration Transferred for the Acquired Business 47
Fair-Value Method 2
Contingent Consideration: An Additional Element
Cost Method (Investments in Equity Securities without
of Consideration Transferred 47
Readily Determinable Fair Values) 3
Assets Acquired and Liabilities Assumed 48
Consolidation of Financial Statements 3
Goodwill, and Gains on Bargain Purchases 49
Equity Method 4
Discussion Question: Did the Cost Method Invite Procedures for Consolidating Financial Information 49
Acquisition Method When Dissolution Takes Place 50
Earnings Manipulation? 5
Related Costs of Business Combinations 55
Application of the Equity Method 5
The Acquisition Method When Separate Incorporation Is
Criterion for Utilizing the Equity Method 5
Maintained 55
Accounting for an Investment—The Equity Method 7
Equity Method Accounting Procedures 9 Acquisition-Date Fair-Value
Excess of Investment Cost over Book
Allocations—Additional Issues 60
Intangibles 60
Value Acquired 9
Preexisting Goodwill on Acquired Firm’s Books 62
Discussion Question: Does the Equity Method Really
Acquired In-Process Research and Development 62
Apply Here? 10
The Amortization Process 12
Convergence between U.S. and International Accounting
International Accounting Standard 28—Investments in Standards 64
Associates 14 Summary 64
Equity Method—Additional Issues 14 Discussion Question: What if an Acquired Entity is Not a
Reporting a Change to the Equity Method 14
Business? 65
Reporting Investee’s Other Comprehensive Income and
Appendix A 69
Irregular Items 16
Legacy Methods of Accounting for Business
Reporting Investee Losses 17
Combinations 69
Reporting the Sale of an Equity Investment 18
The Purchase Method: An Application of the Cost
Deferral of Intra-Entity Gross Profits in Inventory 19 Principle 69
Downstream Sales of Inventory 19
The Pooling of Interests Method: Continuity of
Upstream Sales of Inventory 21
Previous Ownership 71
Financial Reporting Effects Comparisons across the Pooling of Interests,
and Equity Method Criticisms 22 Purchase, and Acquisition Methods 72
Equity Method Reporting Effects 22
Appendix B 74
Criticisms of the Equity Method 23
Pushdown Accounting 74
Fair-Value Reporting for
Equity Method Investments 23 Chapter Three
Summary 25 Consolidations—Subsequent to the Date of
Acquisition 93
Chapter Two
Consolidation—The Effects Created
Consolidation of Financial Information 39
by the Passage of Time 94
Expansion through Corporate Takeovers 40 Consolidated Net Income Determination 94
Reasons for Firms to Combine 40 The Parent’s Choice of Investment Accounting 94
Goodyear Tire & Rubber and Cooper Tire & Rubber 42 Investment Accounting by the Acquiring Company 94
xvii
xviii Contents

Internal Investment Accounting Alternatives—The Revenue and Expense Reporting for

Equity Method, Initial Value Method, and Partial Equity Midyear Acquisitions 179
Method 95 Consolidating Postacquisition Subsidiary Revenue and
Discussion Question: How Does a Company Really Expenses 179
Decide Which Investment Method to Apply? 96 Acquisition Following an Equity Method Investment 181
Subsequent Consolidation—Investment Recorded by the Step Acquisitions 181
Equity Method 97 Control Achieved in Steps—Acquisition Method 182
Acquisition Made during the Current Year 97 Example: Step Acquisition Resulting in Control—Acquisition
Determination of Consolidated Totals 100 Method 182
Consolidation Worksheet 101 Worksheet Consolidation for a Step Acquisition
Consolidation Subsequent to Year of Acquisition—Equity (Acquisition Method) 184
Method 104 Example: Step Acquisition Resulting after Control Is
Subsequent Consolidations—Investment Recorded Using Obtained 184
Initial Value or Partial Equity Method 107 Discussion Question: Does GAAP Undervalue Post-
Acquisition Made during the Current Year 108 Control Stock Acquisitions? 186
Consolidation Subsequent to Year of Acquisition—Initial Parent Company Sales of Subsidiary
Value and Partial Equity Methods 111 Stock—Acquisition Method 187
Discussion Question 115 Sale of Subsidiary Shares with Control Maintained 187
Excess Fair Value Attributable to Subsidiary Long-Term Sale of Subsidiary Shares with Control Lost 188
Debt: Postacquisition Procedures 117 Cost-Flow Assumptions 188
Goodwill Impairment 119 Accounting for Shares That Remain 189
Assigning Goodwill to Reporting Units 120 Comparisons with International Accounting Standards 189
Qualitative Assessment Option 120 Summary 190
Testing Goodwill for Impairment 121
Illustration—Accounting and Reporting for a Goodwill Chapter Five
Impairment Loss 122 Consolidated Financial Statements—Intra-
Comparisons with International Accounting Standards 123 Entity Asset Transactions 215
Amortization and Impairment of Other Intangibles 124
Intra-Entity Inventory Transfers 216
Contingent Consideration—Postcombination 125
The Sales and Purchases Accounts 216
Accounting for Contingent Consideration in Periods
Intra-Entity Gross Profit—Year of Transfer (Year 1) 217
Subsequent to a Business Combination 126
Discussion Question: Earnings Management 218
Summary 128
Intra-Entity Gross Profit—Year Following Transfer
Appendix: Private Company Accounting for Business
(Year 2) 219
Combinations 132
Intra-Entity Gross Profit—Effect on Noncontrolling
Interest 221
Chapter Four Intra-Entity Inventory Transfers Summarized 222
Intra-Entity Inventory Transfers Illustrated: Parent Uses
Consolidated Financial Statements and Outside
Equity Method 223
Ownership 159
Effects of Alternative Investment Methods on
Consolidated Financial Reporting in the Presence of a Consolidation 231
Noncontrolling Interest 160 Discussion Question: What Price Should We Charge
Subsidiary Acquisition-Date Fair Value in the Presence of a Ourselves? 234
Noncontrolling Interest 161 Intra-Entity Land Transfers 235
Discussion Question: Noncontrolling Interest Accounting for Land Transactions 235
Valuation 162 Eliminating Intra-Entity Gains—Land Transfers 236
Control Premiums, Noncontrolling Interest Valuation, and Recognizing the Effect on Noncontrolling Interest—Land
Goodwill 163 Transfers 237
Allocating Consolidated Net Income to the Parent Intra-Entity Transfer of Depreciable Assets 238
and Noncontrolling Interest 165 Deferral and Subsequent Recognition of Intra-Entity Gains 238
Partial Ownership Consolidations Depreciable Asset Intra-Entity Transfers Illustrated 239
(Acquisition Method) 166 Years Following Downstream Intra-Entity Depreciable Asset
Illustration—Partial Acquisition with No Control Transfers—Parent Uses Equity Method 241
Premium 167 Effect on Noncontrolling Interest—Depreciable Asset
Illustration—Partial Acquisition with Control Premium 176 Transfers 242
Effects Created by Alternative Investment Methods 179 Summary 242
 Contents xix

Chapter Six Consolidated Entities and Operating Loss

Variable Interest Entities, Intra-Entity Carryforwards 344
Income Taxes and Consolidated Entities—
Debt, Consolidated Cash Flows, and Other
Comparisons with International Accounting
Issues 265
Standards 345
Consolidation of Variable Interest Entities 265 Intra-Entity Inventory Tax Effects 345
What Is a VIE? 266 Intra-Entity Tax Effects Other Than Inventory 345
Consolidation of Variable Interest Entities 267 Summary 346
Procedures to Consolidate Variable Interest Entities 271
Consolidation of a Primary Beneficiary and VIE Chapter Eight
Illustrated 272 Segment and Interim Reporting 365
Comparisons with International Accounting Segment Reporting 366
Standards 276 The Management Approach 366
Intra-Entity Debt Transactions 276 Determination of Reportable Operating
Acquisition of Affiliate’s Debt from an Outside Party 277
Segments 366
Accounting for Intra-Entity Debt Transactions—
Quantitative Thresholds 367
Individual Financial Records 278
Testing Procedures—Complete Illustration 368
Effects on Consolidation Process 280
The Revenue Test 368
Assignment of Retirement Gain or Loss 280
The Profit or Loss Test 368
Intra-Entity Debt Transactions—Years Subsequent
The Asset Test 370
to Effective Retirement 280
Summary of Test Results 370
Discussion Question: Who Lost This $300,000? 281 Other Guidelines 371
Subsidiary Preferred Stock 284 Information to Be Disclosed by Reportable Operating
Consolidated Statement of Cash Flows 286 Segments 373
Acquisition Period Statement of Cash Flows 287
Reconciliations to Consolidated Totals 374
Statement of Cash Flows in Periods Subsequent to
Explanation of Measurement 375
Acquisition 290
Examples of Operating Segment Disclosures 375
Consolidated Earnings per Share 290 Entity-Wide Information 377
Subsidiary Stock Transactions 293 Information about Products and Services 377
Changes in Subsidiary Value—Stock Transactions 294
Information about Geographic Areas 377
Subsidiary Stock Transactions—Illustrated 297
Discussion Question: How Does a Company Determine
Summary 301 Whether a Foreign Country Is Material? 379
Information about Major Customers 380
Chapter Seven International Financial Reporting
Consolidated Financial Statements—Ownership Standard 8—Operating Segments 380
Patterns and Income Taxes 321 Interim Reporting 381
Revenues 382
Indirect Subsidiary Control 321
Inventory and Cost of Goods Sold 382
The Consolidation Process When Indirect Control Is
Other Costs and Expenses 383
Present 322
Income Taxes 384
Consolidation Procedures—Indirect Control 324
Change in Accounting Principle 385
Indirect Subsidiary Control—Connecting Affiliation 330
Seasonal Items 386
Mutual Ownership 332
Minimum Disclosures in Interim Reports 387
Treasury Stock Approach 332
Segment Information in Interim Reports 388
Mutual Ownership Illustrated 333
International Accounting Standard 34—Interim Financial
Income Tax Accounting for a Consolidated Entity 335
Reporting 388
Affiliated Groups 335
Summary 389
Deferred Income Taxes 336
Consolidated Tax Returns—Illustration 337 Chapter Nine
Income Tax Expense Assignment 338
Foreign Currency Transactions and Hedging
Filing of Separate Tax Returns 339
Foreign Exchange Risk 407
Deferred Tax on Undistributed Earnings—Illustrated 340
Separate Tax Returns Illustrated 341 Foreign Exchange Markets 408
Temporary Differences Generated by Business Exchange Rate Mechanisms 408
Combinations 342 Foreign Exchange Rates 408
Another random document with
no related content on Scribd:
 “I haven’t done with you—​depend upon that,” cried Peace.
“You’ve got the better of me now, I admit, but that does not settle
the difference between us.”
“Get away, you stupid fellow,” returned Gatliffe; “you don’t
suppose I’m afraid of a man like you. Be off, and give me no more of
your impudence, for if you do, I tell you candidly you wont escape
again with a whole skin.”
Peace made another hideous face, after which he jumped over
the stile and threaded his way through a narrow pathway which ran
by the side of a corn-field.
Gatliffe watched him for some little time—​he then turned towards
the two farm labourers and laughed.
“He’s a spiteful, vindictive rascal,” said he; “there’s no doubt of
that.”
“He be vicious, an’ I should say from the look on’un a bad lot,”
observed the ploughman. “There aint much on ’im, but what there is
is all fire and brimstone, an’ it dont take much to set it alight.”
 CHAPTER XI.

THE PROPOSAL—​MRS. MAITLAND BECOMES

COMMUNICATIVE.

Humiliated and crestfallen, Peace returned to his old haunts at

Sheffield. He solaced himself by writing a long and affectionate letter
to Bessie Dalton, of whom he had taken but little notice for some
time past; now he endeavoured to make amends for his neglect.
The excuses he made for this were, as a matter of course, mainly
drawn from his own imagination, which, as far as false statements
were concerned, was at all times fertile enough.
He mixed freely with his boon companions and played the violin
nightly at one or more of the sing-songs held at the public-houses in
the town. He had “the gift of the gab,” as it is termed, could
converse glibely enough upon most topics, in addition to which he
had quaint sayings and amusing ways, which went far towards
ensuring him a cordial reception from the frequenters of the houses
he chose to honour with a visit.
In many ways Peace was a remarkable man. He was a
consummate scoundrel from the outset to the close of his career, but
he could be, when he chose, a very plausible one.
Had he not been this he could never have imposed upon so many
persons as he did.
 But, despite his well-affected hilarity, grief lay heavy at his heart
when he thought of the beauteous Aveline Maitland.
Her image was for ever presenting itself to his vision.
“But she’s far beyond my reach,” he would murmur. “She never
would have listened to me under any circumstances. No, she’s too
far removed from such as me.”
The more he thought over the matter the more he became
impressed with the fact. The only wonder is that he had not arrived
at this conclusion from the very first.
His successful rival, Tom Gatliffe, had been on terms of the
closest intimacy with Mrs. Maitland and Aveline. His love for the
latter had grown with his growth and strengthened with his strength.
He positively worshipped the fair young creature who had so
enslaved him, but for a long time he had remained silent upon the
subject which engrossed his whole thoughts.
Young Gatliffe belonged to what is called the industrial class, but
he had received an education superior to the generality of men in his
station of life. He was by trade an engineer.
Patient, self-reliant, and industrious, he had won for himself a
good position in one of the leading firms in Sheffield. His employers
had great confidence in him, and he was a young man who gave
early promise of pushing his way in the world. He was steady, frugal,
and had already saved a considerable sum of money. He had of late
become more persistent in his attentions to Aveline.
The end of this may be readily divined.
He avowed his love, and proposed.
Aveline did not refuse. On the contrary, she accepted him upon
the condition that he was to broach the subject to Mrs. Maitland.
 The young engineer was in an ecstacy of delight at his success so
far.
Soon after his encounter with Peace he bent his steps towards
the widow’s cottage, and sought an interview with its mistress.
Mrs. Maitland shrewdly guessed the object of his visit.
She conducted him into the front parlour, closed the door, and sat
herself down in one of the arm-chairs, motioning her visitor to be
seated in another.
“My dear Mrs. Maitland,” said Gatliffe. “It is indeed a subject of
most serious import, as regards my own happiness, which has
occasioned me to seek you. For a long time past I have been
attached to your daughter—​possibly you might have guessed this.”
The widow nodded.
“Ah, as I supposed.”
“And Aveline?”
“I have told her all—​told her that a great golden blaze of light
seemed to fall upon me when I first beheld her. I love her and have
avowed my love. She bade me seek you—​bade me ask your
consent. That is why I am here.”
“I see and comprehend most fully. You love one another. Well, Mr.
Gatliffe, you are not the first man who has been struck with Aveline
—​but let that pass. I esteem and respect you, and, as far as I am
concerned, there will be no impediment in the way.”
“I think you too worthy a fellow to offer any objection to—​you
have my consent. As far as that is concerned, consider the matter
settled. But there are other considerations,” she added, in a more
serious tone.
“Considerations!” he exclaimed. “Possibly you allude to my
position in life.”
 “Oh, dear me, no—​not for a moment.”
“Pray explain. Let me know the worst,” he ejaculated, in evident
trepidation.
“In the first place,” answered the widow, “I must inform you that
Aveline is not my daughter.”
“Not your daughter, Mrs. Maitland! Impossible!”
“No, but I am quite as fond of her as if she were my own child,
but she is not, and I think it but right and proper that you should be
put in possession of all the facts. She is not my daughter.”
“Whose daughter is she then?”
“That I cannot tell you. I have adopted her, and brought her up
from infancy.”
“I am indeed surprised.”
“That is no more than I expected. Listen! You are perhaps not
aware that I was at one time matron to the Derby Infirmary. It was
while acting in this capacity that I first met with Aveline, who was
then between two and three years old.
“There had been a collision on the line. Many persons were
seriously injured, while some were picked out of the carriages dead.
“One poor lady was brought into the infirmary in a dying
condition. When discovered, strange to say, a little girl, supposed to
be her daughter, whom she clasped in her arms, was found to be
uninjured; they were both conveyed to the infirmary.
“The mother was in a state of insensibility. After she had been
attended to by the surgeon she rallied a little, and murmured once
or twice, in a half dreamy state, the word ‘Aveline.’ The child
answered to the name, and went to the bedside of the sufferer.
 “We endeavoured to get the poor lady to tell us who she was, but
she was too ill to speak, and the doctor forbade us making any more
inquiries for the present.
“It was a pitiful sight, for you must understand that there were
many other poor creatures besides her who required immediate
attention, and of course it was the duty of myself and the nurses
under my direction to see to them without a moment’s delay.
While thus engaged one of the nurses came to me, and
whispered in my ear that the lady in bed No. 14 had breathed her
last.
“I hastened to the spot, and found that her words were but too
true. The child was crying, and I directed one of the women to take
it into the house I occupied, and tell Rebecca, my servant, to take
charge of it till I came.”
“And its mother?”
“Had passed away, as I have told you. Many others succumbed to
the injuries they had received. Most—​nay, indeed, I believe all—​were
identified by their relatives—​all, save the lady and her child.
“For these no claimant could be found. Not the faintest scrap of
intelligence reached us from any quarter to give a clue to their
identification.
“The lady to all appearance belonged to the upper class. She had
a sweet face and features of delicate mould; but who she was it is
not possible to say. Neither do I think it likely now that we shall ever
ascertain.”
“Goodness me—​how singular! And had she nothing about her to
denote who and what she was?”
“She wore round her neck a double gold locket, containing the
portrait of a gentleman on one side, on the other was a likeness of
the deceased lady, and, in addition to her wedding ring, she wore
one with a motto and crest inside it. A description of her and the
child, together with the jewellery she had on, appeared in the list of
the dead and missing in the public papers at the time, but no one
came forward to claim either the living or the dead.”
“Can such things be possible?” exclaimed Gatliffe.
“My dear sir, they are of frequent occurrence. If we could know
the number of missing and unclaimed persons which every year
furnishes us with, it would surprise most people. But what I am
telling you now are simply facts which have come under my own
observation.”
“And the mother, what became of her remains?”
“After every effort had been made to discover her relations, and
we had given it up as hopeless, my husband paid for her funeral,
and he said, at the same time, that he would never part with the
child. Poor dear soul! he kept his word. She was by his bedside
when his gentle spirit passed away. He almost worshipped Aveline,
and she was equally attached to him. She has been indeed more
than a daughter to us.”
“And have you the locket and the two rings?”
“They were kept in the hospital for some years, but upon my
retiring, I begged them of the governors, and they at once gave
orders for them to be handed over to me. I have them now.”
“And do not intend to part with them, I hope?”
“Certainly not. I consider they belong to Aveline.”
“Why, Mrs. Maitland, this is indeed an extraordinary story.”
“I have thought it a duty incumbent on me to furnish you with all
the particulars. If, after hearing them, you are still disposed to have
Aveline—”
 “If!” ejaculated the young engineer. “You do not for a moment
suppose I have any desire to cancel our engagement. No, my dear
madam, it is an additional reason for my cherishing and protecting
her.”
“Well, Tom, I hope—​nay, I am sure—​you will make her a good
husband; and I frankly admit, if it had been left to me to select one
for her, I should have chosen you.”
Gatliffe sprang to his feet, put his arms round the speaker’s neck,
and kissed her fondly.
“Tush, tush, you silly boy,” said the widow, “what do you want to
be kissing an old woman like me for?”
She was, however, not in any way angry with her companion.
“Is Aveline a Christian or surname, do you think?” queried
Gatliffe.
“I took it to be a Christian name from the fact that the mother
called her child to her bedside by it, and the little thing answered to
it with the greatest alacrity. It is her Christian name now. She’ll not
change it when she marries, I suppose,” added the widow, with a
smile.
“I shall never call her by any other. You know, Mrs. Maitland, I am
but in humble circumstances, but I have enough to give my dear
Aveline all she can desire, and I hope in a short time to be more
prosperous.”
“Ah, as to that, riches are not everything, though many persons
think they are—​I do not, however. By the way, Tom, do you know
that Mr. Peace made Aveline an offer?”
“Yes, I’ve heard so; but she wouldn’t listen to him.”
“No, I candidly confess that I had rather a good opinion of him at
one time—​not as a suitor for Aveline, but I thought him good-
natured and kindly disposed.”
“Probably he may be so.”
“But I have very much altered my opinion with regard to him—​
very much indeed,” returned the widow, with forcible emphasis.
Gatliffe refrained from offering any remark. It was evident, from
his manner, that he did not want to dwell further on the subject.
Aveline now entered the room, whereupon her lover rose and
embraced her.
“It is all settled, dearest,” he exclaimed, in a tone of delight. “You
will learn the full particulars from Mrs. Maitland.”
“So you have been having a tete-à-tete, it seems.”
“Yes, we have, my child,” said Mrs. Maitland, “and a very
satisfactory one it has proved to be.”
“I’m glad of that,” murmured Aveline. “You both seem well
pleased.”
Young Gatliffe thought it was time to take his departure. He was
elated with the successful nature of his interview with the widow,
and thought it best to leave her alone with Aveline.
 CHAPTER XII.

THE BURGLARY AT WOOD-HILL—​AN

UNEXPECTED MEETING.

It would not be edifying to the reader to chronicle all the

marauding expeditions in which our hero was engaged at this
period.
The money obtained by the exercise of his musical ability did not
content him for long. He visited several houses after nightfall, and if
the booty obtained was not large he escaped without detection.
He had “spotted,” to use his own phrase, a house standing in its
own grounds at Wood-hill, within a few miles of Sheffield.
The place seemed so isolated and looked so tempting, it being in
the occupation of some rich person, that Peace determined upon
paying it an early visit.
At the back of the house was a conservatory. This could be
reached from one of the back rooms. Indeed, it might be said to
form part of the room itself.
Peace, who had noted all these things when passing the place in
midday, had determined upon his plan of operations.
He scaled the iron railings which ran round the front garden, and
made at once for the greenhouse. To obtain an entrance into this
was a matter of no great difficulty.
 The two folding doors of the parlour led into the conservatory.
These were, as a matter of course, fastened, but not very securely.
The burglar, who, as we have already seen, was an expert in
dealing with locks and bolts, began by ascertaining, as nearly as
possible, the nature of the fastenings.
With a bit of bent wire he picked the lock, and one of the doors
yielded to his pressure.
He found the top bolt had not been drawn home into its socket,
and an aperture was disclosed sufficiently large for him to withdraw
the bottom bolt with one of the instruments he had brought with
him. The bolt was pulled back, and the door was flung wide open.
All this had been done in so quick a manner that none of the
inmates were disturbed.
Peace entered the back parlour, and found therein a considerable
amount of portable and valuable property. By the aid of one of his
silent lucifers, he possessed himself of a number of articles, which
he placed together on the table, with the intention of removing them
upon his return from the other rooms, which it was his purpose to
ransack in a similar manner.
He went into the front parlour, and took from it a still richer booty,
which he placed by the side of the first heap.
This done, he crept cautiously upstairs, and entered the front
drawing-room on the first floor.
This was furnished with most costly articles. The burglar was
quite charmed with the appearance of the apartment, still more so
with its contents.
He now for the first time made use of one of the long screws
which he used so frequently in the after part of his lawless career.
 Closing the door, he bored a small hole in it with a bradawl; into
this he inserted a long, pointed screw, which he turned with a
screw-driver, and by this means fastened himself securely in the
room.
No one would be able to gain an entrance.
With one of his lucifers he lighted a small wax taper, which he
placed on one of the hobs of the grate. Then he proceeded to open
all the drawers and cupboards, from which he abstracted a number
of valuables. These he placed in his bag.
He felicitated himself upon the successful nature of the
expedition; the proceeds of his night’s work would undoubtedly
realise a considerable sum of money, even at the Jew’s price.
As may be supposed, he did not leave much behind that there
was any possibility of carrying away.
The examination of the room, the turning over the various
articles, and abstraction of the same, took a longer time than he had
expected; nevertheless, he deemed himself quite safe, as the door
was securely fastened.
When he had selected all that he intended to take away with him,
he blew out his taper, and began to withdraw his long, thin screw.
This done, he cautiously opened the door, and peeped out.
No one was visible.
Turning round to reach his bag, his coat-tail caught the branch of
a candelabrum, which fell to the floor with a loud crash.
In another moment he was alarmed by the barking of a dog, and
in the next a fierce animal rushed into the room, and sprang at his
throat.
Peace was greatly alarmed. The whole household would, in all
probability, be aroused.
 “Curse the hound!” he muttered; at the same time grasping the
dog’s throat with both hands, so as to silence him, and at the same
time, if possible, to throttle him.
A struggle ensued between the burglar and the dog, which, short
and desperate as it was, seemed an age to Peace.
He flung his canine opponent with all his force to the other end of
the room; but the dog was not easily cowed; he came on once
more.
Peace had expected this. As the animal approached, he struck it a
terrific blow on the head with his jemmy. For a moment the poor
creature was stunned.
Peace shouldered his bag, and was about to make off, when he
received a cut on the forehead from some weapon, which caused a
thousand sparks to flicker before his eyes.
He struck out right and left with his jemmy at a dark figure in the
doorway.
In another moment he was in the grasp of a powerful man,
whose features were not distinguishable, the room being at this time
in almost utter darkness.
“Scoundrel—​villain!” exclaimed his opponent; “you shall not
escape me.”
Peace made no answer to these expletives.
He had but one thought—​this being to get away. He struggled
desperately, and fought like a tiger.
The two combatants fell to the floor, rolling over together. Peace
kicked and struck out with his fists, but for all he could do he could
not shake off his resolute antagonist.
The dog, who had now in a measure recovered from the blow, set
up a loud barking.
 He, with a noble instinct, rushed to his master’s assistance and
caught Peace by one of his legs, who kicked the animal savagely
with the other.
“Down Bruno—​down, boy,” ejaculated Peace’s opponent.
At these words the dog ceased further hostilities. Peace by a
supreme effort rose to his feet, but he was still in the grasp of his
enemy, who also rose.
The noise and barking of the dog aroused another inmate of the
house; this was the servant girl, who hurried on her things and
hastened to the scene of action with a lighted candle in her hand.
“For mercy’s sake, Mr. Gatliffe, whatever is the matter?” she
inquired.
Peace’s heart beat audibly. He was in the hands of Tom Gatliffe.
By the light of the candle which the girl carried he beheld the
well-known features of his rival.
“Heaven be merciful!” exclaimed the latter, who despite his
disguise at once recognised Peace. “Can it be possible?”
He regarded the burglar with a look of bewilderment. Peace was
abashed; panting and puffing like a grampus, he drew back and
supported himself against the edge of the cheffonier.
The two—​the honest man and the rogue—​regarded each other in
silence for a brief space of time.
“I had never counted on this—​I am appalled,” exclaimed Gatliffe.
“A robber, a thief, a burglar! It surpasses all belief!”
A stream of blood trickled down the face of our hero from the
blow he had received at the commencement of the conflict, but he
was heedless of this. The exposure, the terrible discovery made by
young Gatliffe, afflicted him more than aught else.
 “What have you to say for yourself—​can it be possible that you
have sunk so low as this? I can hardly realise the fact, which,
however, is but too evident. I would that some other person had
made this discovery.”
“It’s no use making fine set speeches,” returned Peace; “here we
both are. It is not a pleasant meeting for either of us, but we must
make the best of it.”
“What has been the matter?” inquired the girl. “Shall I go for
James, or a policeman, or what?”
“You had better go for a policeman; but stay, where is James?”
“In the room over the coach-house, I suppose.”
“Well, we don’t want his assistance—​go for a policeman. The
station is not far hence—​go, there’s a good girl.”
The maid placed the candle on the table, put on her shawl, and
sallied forth.
When she had gone Gatliffe closed the door, locked it, and put the
key into his pocket.
“Now,” he said, turning to Peace, “you an my prisoner.”
“So it seems,” returned the latter, who had by that time recovered
his assurance; “but may I inquire what you do here? You are not
master of this house—​are you?”
“I am not, but one of my employers is. He’s away in the country,
and during his absence I have taken charge of the premises.
Insolence will avail you but little. You might have got me into
trouble, imperilled my position—​nay, almost ruined me—​had you got
clean away with the things you have purloined.”
“But I’ve not got away, and it’s no use supposing I have,”
interrupted Peace. “It is a bad business, but can’t be helped. Do you
mean to tell me that you are going to hand me over to the police?”
 “It is my duty to do so.”
“Duty, be blowed! Look here, we’ve had a word or two. You’ve
robbed me of the only woman I ever cared for. It’s driven me to
distraction—​that’s what it’s done—​else I shouldn’t be here. It is all
your fault—​but, there, I bear you no animosity. Let bygones be
bygones. I tell you I’ve been driven to distraction. Do you hear?”
“Yes, I do.”
“Well, then, if you are the same generous Tom Gatliffe as I knew
years ago, you wont be hard upon your old chum.”
“What would I give to be out of this difficulty?” exclaimed Gatliffe,
in a tone of sadness. “Do, for mercy’s sake, mend your ways. Never
make another attempt of this sort. It is, I hope, your first false step
—​let it be your last.”
“It shall be—​I promise you that. It shall be the last,” he answered,
with well-simulated hypocrisy.
“For the sake of those who are near and dear to you, do not, I
charge you, stray from the path of honesty. A burglar—​a midnight
robber! It appears almost too terrible to believe. What am I to say to
my employer?”
“You need not say that we were in any way acquainted. The
attempt was made, and you frustrated it. That is all. I’m in your
power, and throw myself upon your mercy. Let me go.”
“If I do, justice will surely overtake you, sooner or later, unless
you mend your ways.”
“I will,” cried Peace. “Be assured of that. Now, Tom, the minutes
are flying rapidly. Even now the police may be on their way here. Let
me get clear off while there’s yet time.”
“But how can I without compromising myself? It is most
repugnant to my feelings, most painful for me to give you in charge.
But what am I to do? How can I help it?”
Open the door, and say I slipped out of your grasp, and got away.
Nothing is easier. Or open the window, I can drop on the grass plat.
Whichever you please, only—​time—​time presses.”
Gatliffe hesitated for a moment, then he took the key out of his
pocket, unlocked the door, flung it wide open, and said, in a hoarse
whisper—
“Go. Get you gone! I imperil my own position, but we are known
to each other from boyhood. Away at once!”
“You’re a good fellow, Tom; I always said so,” murmured Peace.
“Now I am more than ever assured of it. I shall not forget your
kindness. But a few days ago I hated you, and could have killed you.
Now I esteem and love you.”
“Go to —— no more of this,” returned his companion. “All I ask of
you is that you never again suffer yourself to forfeit my good opinion
by any discreditable or dishonest act.”
“Trust me, Tom, I will not,” said Peace, as he flew with rapid steps
down the stairs, and passed through the back parlour, and from
thence into the conservatory.
In a few minutes after this he was clear away from the scene of
his operations.
After his departure Tom Gatliffe remained in the front drawing-
room a prey to a thousand conflicting thoughts.
The unexpected and singular encounter that had taken place was
altogether of such an extraordinary nature that he seemed
bewildered and perplexed.
He had never for a moment imagined that Peace had been
pursuing a lawless career, and the sudden discovery he made that
night fell like a thunderbolt upon him.
 Gatliffe was a young man of the strictest integrity, of the highest
moral rectitude, and he felt supremely miserable when he reflected
upon the incriminating facts, which had been made but too painfully
manifest, in connection with his schoolfellow Peace.
He would have given half he was possessed of not to have been
in the house at the time of the burglary.
Generous, kind-hearted, and forgiving as he was by nature, he
found it impossible to blast the prospects of one whom he had
known, almost on what might be termed the threshold of existence.
He glanced at the burglar’s bag, which contained so many
valuable articles, and, as he did so, a shudder passed through his
frame.
“I fear this is not his first offence,” he murmured, shaking his
head sadly. “Young as he is he may possibly be old in crime; but
perhaps I do him wrong, yet he was certainly disguised in so
cunning and complete a manner that few besides myself would have
known him. Certainly his disguise was perhaps the most surprising
part of the whole business. Oh! this is all very terrible. I feel
wretchedly depressed.”
Footsteps were now heard ascending the stairs, and in another
moment the servant girl entered the room. She was accompanied by
an inspector of the police and a constable.
“Where is the prisoner?” said the inspector.
“He has escaped,” answered Gatliffe.
“Escaped!” iterated the inspector. “Surely you have not been
foolish enough to let him get away. How did it happen?”
“You shall hear. I had him in this room and kept guard over the
entrance. He pleaded for mercy, but I told him I had a duty to
perform. All at once, after remaining quiet and submissive for some
time, he sprang towards the door. I caught hold of him to arrest his
passage; in doing so my foot slipped, and he lost no time in taking
advantage of this accident, and succeeded in releasing himself from
my grasp. It was all done in less time than it takes me to tell it. He
flew downstairs.”
“Well, you followed, of course?”
“Yes.”
“And could not overtake him?”
“I had very nearly done so, when he rushed into the back parlour,
closed the door, and locked it. I ran round the conservatory,
searched everywhere I could think of, but was unable to find him.
Oh! he has escaped, but it is no fault of mine.”
This, as the reader may guess, was not a truthful statement, but
it was the only course Gatliffe had left to get himself out of the
difficulty.
The inspector looked at the constable—​then they both gave a
glance at Gatliffe, who, as a natural consequence, felt greatly
disconcerted.
No. 7.
 BESSIE DREW FORTH FROM THE PAPER A HUNDRED
POUND NOTE.

“Well, it is very unfortunate—​exceedingly so,” observed the

inspector. “Should you know the man again?”
“Oh, dear, yes; I’ve no doubt I should.”
“So should I,” exclaimed the girl. “I should know him out of a
thousand. He had a dark skin, and appears to be a mulatto.”
 “Is that so?”
This last query was addressed to Gatliffe.
“Yes, she’s quite right—​that was what he appeared to be—​a half
caste, a creole, or mulatto.”
“Ah! several burglaries have been committed by a man of that
description. I am much mortified at his having made his escape.”
“It is indeed very much to be regretted, but it is no fault of mine.
I hope you don’t think it is,” said Gatliffe.
“I don’t say it is any fault of yours,” returned the inspector, testily.
“I only say it’s unfortunate, that’s all—​confoundedly unfortunate,
when you’ve bagged your bird, to let him fly away. I say again, it’s
unfortunate; but talking wont mend the matter. Let’s search the
house, Jawkins.”
This was addressed to the constable.
“You see this?” remarked Gatliffe, pointing significantly to the
bag.
The constable opened it, and drew forth one article after the
other in the usual systematic and professional manner invariably
adopted by gentlemen of his profession.
“He meant walking away with a tolerably rich booty,” observed the
inspector. “Ah! he knew his business—​not the least doubt of that.”
Gatliffe was ready to sink through the floor; he was so abashed
and humiliated at the contemptible part he had been playing, which
was, to say the truth, altogether foreign to his nature.
After the bag had been emptied of its contents the police-officers
proceeded downstairs. They were followed by the young engineer
and the servant girl.
 The other pile of valuables was discovered on the table in the
back parlour. These of course underwent inspection. During the
examination of each separate article Gatliffe was perfectly appalled
at the magnitude of the projected robbery; but he said nothing,
being, in fact, too depressed to venture too many observations.
“Here is where the rascal gained an entrance into the premises,”
pointing to the folding-doors which led into the conservatory, which
gave unmistakeable indications of the marks made by the burglar’s
instruments.
A rapid and rigid search was now made in the grounds, both in
the rear and in the front of the house.
But no burglar was discovered.
The services of Bruno, the faithful dog, were enlisted in this
search, which, however, turned out to be fruitless.
The constables returned to the house. They were evidently deeply
mortified at the escape of the robber, and could but ill conceal their
vexation.
“He’s given us the slip,” said the inspector. “Got far away by this
time, I’ve no doubt. It’s very annoying, but it can’t be helped.”
“I’m sure I am very sorry to have given you so much unnecessary
trouble,” murmured Gatliffe. “The more so since I found it impossible
to detain him. I wish you had come a little earlier.”
“We did not lose a moment after the young woman informed us
of the affair. You take my advice,” remarked the inspector,
addressing himself to Gatliffe, “the next time you collar a
‘cracksman,’ stick to him. Don’t let him slip through your fingers.”
“Mr. Gatliffe held him fast enough,” said the servant, in a tone of
indignation. “He’s not the man to give in easily. He had a most
desperate struggle with the burglar before I left; and had it not been
for him and Bruno the house would have been well-nigh stripped.”
 The inspector nodded his head in acquiescence of this last
proposition.
“We will take the bag with us,” he observed, as he made his way
to the drawing-room. “It may afford some clue to the robber.”
Upon entering the upstairs room, he discovered on the floor the
“jemmy” with which Peace struck the dog. It had fallen out of his
hand during his struggle with Gatliffe.
This was also carried away by the police. Upon their return to the
station orders were issued to the men on duty to keep on the look-
out for the next few days for a man answering to the description of
the burglar.
But the bird had flown—​he had also changed his plumage—​and
he was, moreover, too cunning a bird to be seen in the
neighbourhood for some time—​certainly not till the attempted
burglary was a thing of the past.
Gatliffe was in a state of trepidation for some days. The false
statement he had made to the police officers caused him the
deepest anxiety.
It was altogether so repugnant to his feelings to deviate from the
truth that he felt humiliated at having been compelled, by the force
of circumstances, to trump up so specious a tale to cover the flight
of Peace.
He accused himself of having aided and abetted a burglar in his
lawless attempt at robbery.
This was, however, viewing the matter in its worst light. If Gatliffe
had erred it was from the best motive; it was to save one whom he
had known for many years. He had not the faintest notion, when he
connived at his escape, that he was dealing thus mercifully with a
callous and hardened criminal.
 But Peace, it must be acknowledged, was a remarkable man in
many ways, not the least of these being his wondrous power of
imposing upon persons with whom he came in contact.
It is at all times difficult to gauge accurately the character of
culprits of this class.
In a popular history of British criminals the biographer,
introducing a certain infamous rascal, remarks very justly that as a
rule the recorders of rogues and vagabonds endow them with
qualities they did not possess, and credit them with exploits they
never performed.
Hence follows, in the opinion of this judicious commentator, “the
difficulty of finding out and appreciating, as they merit, genuine
anecdotes of these heroes.” Burglars suffer, like bards, from theft of
their reputation, and the notorious shoplifter is as liable as the
eminent statesman to be saddled with misdeeds he never committed
and defrauded of distinction actually earned.
The Newgate chronicle we have quoted tells us in a word how
this comes to be.
If any man makes himself distinguished by crime a hundred
stories are set in circulation, putting down things to him which he
knew nothing about. Peace is no exception to this rule.
A leading London paper reported that he had paid a visit to
Chislehurst as a private gentleman, who desired to build a habitation
of a similar character—​the real object of his visit, however, being to
gain a knowledge of its interior for the purpose of carrying out a
burglary on a large scale.
There is not a shadow of truth in this report. Peace was never at
Chislehurst; neither did he ever contemplate breaking into the place.
It is a long time happily since this sort of scandal engaged the
tongues and thoughts of the British public.
 The days are gone by for ever when each county in England had
its outlaw, whose achievements filled the “lying trump of fame,” and
agitated society with a pleasing fear unfelt among our modern
sensations.
When, however, at rare intervals, some superior villain appears
above the lawless crowd, we find the old tendency to make the most
or worst of him lingers not dead but sleeping.
Our hero is an instance in point.
We doubt, indeed, if any individual named in the long black bead-
roll of the criminal calendar has inspired more invention, or figured
in so much fancy, as Charles Peace.
His midnight adventures have not that strong flavour of exciting
romance we find in the histories of bygone marauders.
He was practical to austerity, and never made a move that was
not calculated and carried out to answer a severe business purpose.
No doubt, as we have before observed, his artfulness, his daring,
and other qualities made him a remarkable man.
Unhappily for himself and his endowments, which would have
enabled him to win a respectable position in an honest career,
appear to have been singularly fitted for the life he chose to follow.
Although he has been charged with many offences he never
committed, it may be safely believed that during the thirty years or
so he was preying upon the public he has done an enormous
amount of mischief.
A poet is said to be one in ten thousand. A man of the special
capacity of Peace is far more rare.
He seems like the conquerors, and produces on his fellow-men
the same sort of hope that he may be the last of his class.
 Probably there is not another man in England who could have run
the race of this criminal—​by night a thief and a murderer; by day a
citizen of credit, who went abroad without fear in the busy haunts of
men.
The miserable failure he had made in attempting to rob the house
of which Gatliffe was the custodian did not abash him.
He was to be seen in places of public resort at Sheffield on the
following day.
Indeed, he mixed more freely with the townspeople than he had
done heretofore.
It is our purpose in this work to throw a light on the actions and
deeds of its lawless hero; not for the purpose of holding him up as
an example, but rather as a warning.
His career furnishes us with a proof that a life of crime is always a
life of care.
Disgrace, obloquy, and punishment are the sure attendants on the
footsteps of a criminal.
Some few days after his last unsuccessful escapade, Peace was
standing outside the principal post-office in Sheffield.
He had been to inquire if there were any letters for him.
He expected to receive one from Bessie Dalton, who, in
accordance with his instructions, directed her epistles to the post-
office to be kept till called for.
Peace had received several, but for some little time past none had
arrived.
He was debating with himself as to the cause, when, much to his
surprise, he descried Tom Gatliffe hastening on in the direction of
the spot where he was stationed.
 It was not possible for him to avoid being recognised, and, to say
the truth, he had no desire to do so.
He waited till Gatliffe came up to him.
His countenance denoted that he was a little concerned at the
rencontre.
Gatliffe posted some letters, and then turned towards Peace with
a look of deep sorrow.
“You remember the promise given to me on that terrible night?”
said Gatliffe, in a whisper.
Peace nodded.
“I do,” he returned; “shall always hear it in remembrance. Be in
no way concerned about me. I’ve seen my error, and am now a
different man.”
“I hope and trust you are. Now, Peace,” said the young engineer,
in a more serious and persuasive tone, “let me conjure you, let me
beg of you, never to fall into a similar error. It must have been the
archfiend who tempted you to commit such a monstrous act.”
“Say no more about it. Let it be forgotten. You have been in no
way compromised, I hope.”
“I must tell you frankly that I found myself in such a terrible
scrape, when the police arrived, that I was constrained to do more
for you than I have ever done for myself. I had to tell a most
deliberate falsehood, but let that pass. You will, I am sure, be
mindful of your promise. You are young, possess ability, and may yet
win a good position in life. But do not be tempted. If you are in want
of money at any time drop me a line, and what I can spare in the
way of a loan for a short time you are welcome to. Only do not, I
charge you, attempt to rob or plunder. I am sure I wish to be
everything that’s kind to you; but lately I have heard things which
seem to strike me with horror.”
 “What have you heard?”
“I will not pain you by repeating.”
“Oh! don’t mind that. The plain truth is at all times the best. What
have you heard?”
“Well, then, if you must know, the police informed me that there
had been several burglaries committed by a person answering to
your description.”
“And surely you are not fool enough to believe such a statement.
They always say that. They think it so clever. My description, indeed!
They wont tell me so.”
“I don’t mean a description as you now appear, but as you were
on that dreadful night.”
Peace laughed.
“Ah, I see,” he muttered. “Why, I wonder even you knew me,
disguised as I was.”
“I wonder myself.”
“Would they know me now, do you think?”
“Not at all likely, I should say.”
“And Aveline Maitland—​what of her?” inquired Peace, in an
altered tone, for as he inquired a sudden pang seemed to shoot
through his frame.
“What of her?” repeated Gatliffe; “why do you inquire?”
“Don’t be jealous—​she is nothing to me.”
“I’m not likely to be jealous.”
“You are engaged to her?”
“Yes, I am.”
 “I thought so. Well, I wish you every happiness—​that’s all I have
to say; but a short time since she drove me to desperation—​I did not
much care whether I lived or died; now that is past—​I’m getting
over it.”
Gatliffe looked surprised. There was an earnestness in his
companion’s manner which went far towards giving assurance of the
speaker’s sincerity.”
“You’ll not forget all I have said, neither will you forget your
promise—​and so farewell,” said Gatliffe, with a nod, as he took a
somewhat abrupt departure.
“Farewell,” repeated Peace. “My ways are not your ways,” he
added, when the engineer was out of earshot.
“Hang it all! what can be the reason of Bessie’s silence? Two
letters unanswered—​something must be up. Has she turned against
me?”
This thought seemed to a little depress him; not that he had any
right to expect anything else, seeing that he had neglected her in a
most heartless manner. He reflected for some little time, and then
said—
“I shall have to go over to Bradford, I expect—​that’s what I shall
have to do. Bessie’s a sharp clever girl, and I mustn’t lose sight of
her. A plague upon that drunken brute, Bristow! Had it not been for
him I should not have had occasion to leave Bradford.”
His soliloquy was brought to a close by a female addressing him
by his Christian name.
It was his mother, who, with all his faults, regarded him with a
glance of fond affection.
“Well, Charlie, you rover, now I have found you I don’t intend to
let you go,” said the old lady, playfully. “You must come along with
me.”
 “Where to?”
“Where do you suppose? You must come home. Surely you can
spare your poor mother a little of your company?”
“All right, then; homewards we will go,” cried Peace, leading the
way in the direction of his parent’s house.