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served at various times as Mountain State Ford's general manager,
president, and chairman of its board of directors.
When Mountain State Ford commenced business in 1968, the
accounting methods that it adopted and the books and records that
it maintained were in accordance with the Ford standard system
for Ford truck dealers. That system included the way in which
the parts inventory was to be maintained. Throughout the period
from its incorporation until 1978 when Ford no longer owned any
stock of Mountain State Ford, Ford required that Mountain State
Ford retain an independent certified public accountant (C.P.A.)
to conduct an annual audit, prepare its financial statements,
provide an unqualified opinion for those statements, prepare its
tax returns, and observe the taking of its physical inventory.
During that same period, Ford required that Mountain State Ford's
independent C.P.A. value Mountain State Ford's parts inventory
(1) for Ford parts on the basis of "the dealer net prices as
incorporated in the latest dealer price lists published by Ford"
and (2) for other manufacturers' parts on the basis of "the
dealer net prices as incorporated in the latest dealer price
lists published by the applicable manufacturer".
On a daily basis, Mountain State Ford ordered and received
parts from manufacturers that ranged in number from one to
hundreds, sold parts to customers, and, for reasons not disclosed
by the record, received parts that were returned by certain of
its customers. The price that each manufacturer charged Mountain
State Ford for each of the parts that it ordered was published in
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Last modified: May 25, 2011