Related Party Transactions
|9 Months Ended|
Sep. 30, 2018
|Related Party Transactions [Abstract]|
|Related Party Transactions||
10. RELATED PARTY TRANSACTIONS
Accounts receivable – related parties of $137,396 and $851,016 at September 30, 2018 and December 31, 2017, respectively, represents the net realizable value of advances made to related, but independent, entities under common management, of which $78,140 and $724,591 respectively, represents amounts owed to the Company in connection with expense sharing agreements as described below.
See Note 6 – Investments and Fair Value of Financial Instruments, for information related to investments in related parties.
On April 1, 2010, the Company entered into an agreement with a related entity, of which Algodon’s Chief Executive Officer is Chairman and Chief Executive Officer and Algodon’s Chief Financial Officer is an executive officer, to share expenses such as office space, support staff and other operating expenses. The Company is entitled to receive reimbursement of $87,719 and $227,378 for expenses incurred during the three and nine months ended September 30, 2018, respectively and $87,399 and $219,754 for expenses incurred during the three and nine months ended September 30, 2017, respectively, pursuant to this agreement. The entity owed $78,140 and $724,591, respectively, as of September 30, 2018 and December 31, 2017, under this agreement.
The Company also had an expense sharing agreement with a different related entity to share expenses such as office space and other clerical services, which was terminated on August 2017. The owners of more than 5% of that entity include (i) Algodon’s Chairman, and (ii) a more than 5% owner of Algodon. The Company was entitled to receive reimbursement of $1,330 and $9,310 for expenses during the three and nine months ended September 30, 2017, pursuant to this agreement. The entity owed $396,116 to the Company under the expense sharing agreement as of September 30, 2018 and December 31, 2017, of which the entire balance is deemed unrecoverable and reserved.
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef