Wally Findlay Galleries International, Inc. and Subsidiaries - Page 5

                                        - 5 -                                         

          improvements to the property at great expense.  These investments           
          would likely have enhanced the premium value of the lease.  Not             
          long after the opening of its gallery at the Avenue Matignon                
          address, the French subsidiary entered into a second lease for              
          the use of display space in the Hotel George V.  The record does            
          not disclose the terms of this lease or the amount of any costs             
          that the French subsidiary may have incurred for acquisition or             
               Most of the paintings offered for sale at the Paris gallery            
          had been acquired from WFGI on consignment.  During the years at            
          issue, when one of these paintings was sold, the parent would               
          record a sale of the painting to the subsidiary at 65 percent of            
          the net retail price, and the subsidiary would record this amount           
          as its cost for the painting.  Amounts due WFGI on account of the           
          subsidiary's sales were payable in U.S. dollars translated at the           
          exchange rate prevailing at the time of sale.  On the other hand,           
          amounts earned by the subsidiary as commissions for purchasing,             
          shipping, and export services on behalf of the parent were                  
          payable in francs.  The cost of sales account payable to the                
          parent and the commissions account payable to the subsidiary were           
          the two major components of the overall intercompany account                
          during the years at issue.                                                  
               No promissory notes were executed to evidence indebtedness             
          on the intercompany account.  There was no stated maturity date,            

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011