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The Pattern of Corporate Financial Structure: A Cross-Section View of Manufacturing, Mining, Trade, and Construction, 1937

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Appendix C, A Comparison of Consolidated and Unconsolidated Balance Sheets This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: The Pattern of Corporate Financial Structure: A Cross-Section View of Manufacturing, Mining, Trade, and Construction, 1937 Volume Author/Editor: Walter A. Chudson Volume Publisher: NBER Volume ISBN: 0-870-14135-X Volume URL: http://www.nber.org/books/chud45-1 Publication Date: 1945 Chapter Title: Appendix C, A Comparison of Consolidated and Unconsolidated Balance Sheets Chapter Author: Walter A. Chudson Chapter URL: http://www.nber.org/chapters/c9218 Chapter pages in book: (p. 128 - 136) .3Appendix C A COMPARISON OF CONSOLIDATED AND UNCONSOLIDATED BALANCE SHEETS IN 1934 'r1E BUREAU OF INTERNAL REVENUE discontinued the privilege of filing consolidated returns. \Vith the aid of extensive tables published in Statistics of Income for 1934, Part 2, some of the differences between consolidated and unconsolidated statements can be appraised.1 The impor- tance of consolidated returns prior to 1934 is indicated by the fact that, over the period 1928-33, 44 percent of the gross income of all corporations was reported on a consolidated basis.2 The shift in the basis of reporting affected not only the capital structure of corporations as a whole but also the comparative capital structure of different size classes and industry groups. There has been some offsetting tendency in recent years to eliminate sub- sidiaries altogether by consolidation with the parent corporation, in order to minimize taxes which would otherwise be paid on intercorporate divi- dends. This development, however, has been most pronounced since 1937, as tax rates have progressively increased, and would not affect the com- parisons between 1934 and 1937. The shift from a consolidated to an unconsolidated basis affected both the absolute dollar volume of various balance-sheet accounts an

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