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RELATED PARTY TRANSACTIONS AND BALANCES | 12 Months Ended
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Dec. 31, 2012
RELATED PARTY TRANSACTIONS AND BALANCES [Abstract] |
RELATED PARTY TRANSACTIONS AND BALANCES | 16. RELATED PARTY TRANSACTIONS AND BALANCES
(1) | The relationships between the Group and related party are as follows:
Name of the related party |  | Relationship
Daqo Group |  | An affiliated company representing the parent company of Daqo New Material holding 100% equity ownership of Daqo New Material. Daqo Group and the Company are controlled by same group of shareholders.
Zhengjiang Daqo Solar Co. Ltd ("Zhenjiang Daqo") |  | An affiliated company which is 100% held by Daqo Group
Daqo Solar Co. Ltd ("Daqo Solar") |  | An affiliated company which is 100% held by Daqo Group
Nanjing Daqo |  | An affiliated company which was 100% held by the Company before September 28, 2012 and is 100% held by Daqo Group since September 28, 2012
Daqo Xinjiang Investment Co., Ltd. ("Xinjiang Daqo Investment") |  | An affiliated company which is 100% held by Daqo Group
(2) | Related party balances:
The balance with Daqo Group and its subsidiaries was as follows: The balances due from related parties include consideration for the transfer of 100% ownership of Nanjing Daqo to Daqo Group. Such balances are unsecured, interest-free, and are payable on demand. The balances are as follows:
|  | December 31, |
|  | 2011 |  |  | 2012 |
Amount due from related party |  |  |  |  |  |  |  |
Zhenjiang Daqo |  | $ | 7,462,697 |  |  | $ | 10,744 |
Daqo Group |  |  | 2,294,988 |  |  |  | 6,440,129 |
Others |  |  | 129,625 |  |  |  | 111,614 |
Total |  | $ | 9,887,310 |  |  | $ | 6,562,487 |
Balance due to related parties include payables for prepayment of polysilicon procurement from Daqo Solar and Xinjiang Daqo Investment and interest bearing loan lent from to Nanjing Daqo. The balances are as follows:
|  | December 31, |
|  | 2011 |  |  | 2012 |
Amount due to related party |  |  |  |  |  |  |  |
Daqo Group |  | $ | - |  |  | $ | 5,359,008 |
Xinjiang Daqo Investment |  |  | - |  |  |  | 2,354,620 |
Nanjing Daqo |  |  | - |  |  |  | 1,645,923 |
Daqo Solar |  |  | 1,552,126 |  |  |  | 13,497,972 |
Others |  |  | 1,607,230 |  |  |  | 850,840 |
Total |  | $ | 3,159,356 |  |  | $ | 23,708,363 |
(3) | The transactions with Daqo Group and its subsidiaries were as follows:
|  | Transaction Nature |  | Year Ended December 31, |
Name of Related parties |  |  | 2010 |  |  | 2011 |  |  | 2012 |
Daqo Group |  | Sales |  | $ | - |  |  | $ | 1,971 |  |  | $ | - |
|  | Purchase-Fixed asset |  |  | - |  |  |  | 15,787,658 |  |  |  | 7,849,533 |
|  | Financing-cash in |  |  | - |  |  |  | 3,095,120 |  |  |  | - |
|  | Financing-cash out |  |  | - |  |  |  | 3,095,120 |  |  |  | - |
|  | Disposition of 100% equity interest of Nan Jing Daqo |  |  | - |  |  |  | - |  |  |  | 9,888,742 |
|  | Prepayment for purchase of fixed assets |  |  | - |  |  |  | - |  |  |  | 1,330,044 |
Zhenjiang Daqo |  | Sales |  |  | - |  |  |  | 6,958,317 |  |  |  | 2,799,428 |
|  | Purchase of cells |  |  | - |  |  |  | 3,314,115 |  |  |  | - |
|  | Processing fee |  |  | - |  |  |  | 1,209,769 |  |  |  | - |
Daqo Solar |  | Purchase-Fixed asset |  |  | 12,942,750 |  |  |  | 20,562,272 |  |  |  | - |
|  | Prepayment received |  |  | - |  |  |  | - |  |  |  | 13,497,973 |
|  | Financing-cash in |  |  | - |  |  |  | 72,199,600 |  |  |  | - |
|  | Financing-cash out |  |  | - |  |  |  | 72,199,600 |  |  |  | - |
|  | Interest charged |  |  | - |  |  |  | 1,552,126 |  |  |  | - |
|  | Short-term interest free loan extended to Daqo Solar |  |  | - |  |  |  | 9,898,458 |  |  |  | - |
Nanjing Daqo |  | Sales |  |  | - |  |  |  | - |  |  |  | 80,126 |
|  | Related party interest bearing loan |  |  | - |  |  |  | - |  |  |  | 1,584,820 |
|  | Interest charged |  |  | - |  |  |  | - |  |  |  | 40,611 |
Xinjiang Daqo Investment |  | Prepayment received |  |  | - |  |  |  | - |  |  |  | 2,354,620 |
Others subsidiaries under Daqo Group |  | Sales |  |  | - |  |  |  | 427,302 |  |  |  | - |
|  | Purchase-Fixed asset |  |  | 989,235 |  |  |  | 2,027,001 |  |  |  | 202,556 |
|  | Purchase-Raw material |  |  |  |  |  |  | 300,574 |  |  |  | 5,282 |
|  | Rental expense |  |  | 32,136 |  |  |  | 612,856 |  |  |  | - |
|  | Service expense |  |  | - |  |  |  | 71,426 |  |  |  | - |
Total |  | Sales |  | $ | - |  |  | $ | 7,387,590 |  |  | $ | 2,799,428 |
|  | Disposition of 100% equity interest in Nanjing Daqo |  | $ | - |  |  | $ | - |  |  | $ | 9,888,742 |
|  | Purchase-Fixed asset |  | $ | 13,931,985 |  |  | $ | 38,376,931 |  |  | $ | 8,052,089 |
|  | Purchase-Raw material |  | $ | - |  |  | $ | 3,614,689 |  |  | $ | 5,282 |
|  | Processing fee |  | $ | - |  |  | $ | 1,209,769 |  |  | $ | - |
|  | Rental expense |  | $ | 32,136 |  |  | $ | 612,856 |  |  | $ | - |
|  | Service expense |  | $ | - |  |  | $ | 71,426 |  |  | $ | - |
|  | Interest expense |  | $ | - |  |  | $ | 1,552,126 |  |  | $ | 40,611 |
|  | Prepayment received |  | $ | - |  |  | $ | - |  |  | $ | 15,852,593 |
|  | Prepayment for purchase of fixed assets |  | $ | - |  |  | $ | - |  |  | $ | 1,330,044 |
|  | Cash received |  | $ | - |  |  | $ | 75,294,720 |  |  | $ | 1,584,820 |
|  | Cash paid |  | $ | - |  |  | $ | 85,193,178 |  |  | $ | - |
Related party transactions with Daqo Group In September, 2010, the Daqo Group converted $79,884,026 due from Daqo New Material, into equity. This amount was recorded by the Company as a noncontrolling interest. In 2011, the Group purchased auxiliary electricity transmission and system equipment totaling $15.8 million from Daqo Group. Daqo Group and its subsidiaries are mainly engaged in High-Low-voltage Electrical System, Components, Environmental Protection, and High-speed Railway Equipment. In 2011, the Company received an interest fee loan of $3,095,120 from Daqo Group, which was fully repaid during the year. In 2012, the Company sold 100% entity interest in Nanjing Daqo to Daqo Group for a consideration of $9,888,742 and $5,110,085 was owed by Daqo Group as of December 31, 2012. Besides, the Company purchased fixed assets totaling $7,849,533 from Daqo Group and had $5,359,008 due to Daqo Group as of December 31, 2012. Furthermore, $1,330,044 was prepaid to purchase fixed assets separately as of December 31, 2012. Related party transactions with Zhenjiang Daqo In 2011, the Company sold $6,958,317 wafers, and purchased cells of $3,314,115, and paid processing fees of $1,209,769 to Zhenjiang Daqo for tolling arrangements of cells. In 2012, the Company sold $ 2,179,723 wafers, $619,705 polysilicon to Zhenjiang Daqo. Related party transactions with Daqo Solar In July 2010, the Company entered into an equipment purchase contract with Daqo Group to assign Daqo Solar to import $32.8 million of equipment on behalf of the Company. During the years ended December 31, 2010 and 2011, equipment of $12.9 million and $20.6 million has been received by the Group, respectively. As of December 31, 2011, the contract has been fully executed. In 2011, the Company received loans of $72,199,600 from Daqo Solar, which were fully repaid during the year and accrued interest of $1,552,126. As of December 31, 2011, the Company provided an interest free loan of $9,898,458 to Daqo Solar. In 2012, the Company entered into a polysilicon sales contract with Daqo Solar, and $13,497,973 payment in advance was received as of December 31, 2012. Related party transactions with Xinjiang Daqo Investment In 2012, the Company entered into a polysilicon sales contract with Xinjiang Daqo Investment, and $2,354,620 payment in advance was received as of December 31, 2012. Related party transactions with Nanjing Daqo In August 2012, the Company entered into a one-year loan agreement with Nanjing Daqo, of $1,584,820 (RMB10 million). The interest rate is fixed at 6%. Besides, the Company also sold $80,126 cells to Nanjing Daqo. Related party transactions with other subsidiaries of Daqo Group In 2010, the Group purchased auxiliary electricity transmission and system equipment of $1.0 million from other Daqo Group subsidiaries. In 2011, the Group purchased auxiliary electricity transmission and system equipment of $2.0 million from Daqo Group subsidiaries. The Group also sold modules of $427,302 to, purchased raw materials of $300,574 from and paid service fees of $71,426 to other subsidiaries of Daqo Group. In 2012, the Company purchased equipment and raw material from other subsidiaries of Daqo Group at the cost of $ 202,556 and $ 5,282, respectively.

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39622-107864 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 57 -Paragraph 1-4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39603-107864 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39678-107864 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(k)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph b -Article 3A Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph k -Article 4 + Details
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