Wally Findlay Galleries International, Inc. and Subsidiaries - Page 20

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          prolonged the French subsidiary's existence until 1987, then took           
          over its facilities and continued to use them for some of the               
          same functions for 8 more years, testifies to the importance that           
          WFGI attached to the image and customer relations that were                 
          associated with the Paris operations.                                       
               The assets of the French subsidiary were stated on the                 
          balance sheet at their book value.  Although fair market value is           
          clearly the more appropriate index, there appears to have been no           
          attempt to appraise them.  The discrepancy between book value and           
          fair market value was likely to be most significant in the case             
          of the long-term lease.  The balance sheet for FY 1984 states its           
          value as $155,671.  This represents the original cost to acquire            
          the lease, FF 1,445,250, translated into U.S. dollars at the                
          exchange rate prevailing on September 30, 1984.  It does not                
          reflect the considerable costs incurred to improve the property.            
          The book value of the improvements at this time, adjusted for               
          depreciation over nearly 15 years, was still $360,693.                      
               Promotional material, dated January 1985, states the value             
          of the French subsidiary's leasehold rights as $250,000.                    
          Petitioners now disavow this estimate as puffery.  They contend             
          that because the lease was in its third trimester and possession            
          of a portion of the premises was in dispute as of the end of                
          FY 1984, the market value would have been substantially impaired.           
          We find this argument unconvincing.  Inasmuch as the officers of            

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