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Commitments and Contingencies | 12 Months Ended
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Sep. 30, 2012
Commitments and Contingencies [Text Block] |
23 | Commitments and Contingencies
(i) | Capital Commitments
| As of September 30, 2011 and 2012, the Company had the following contracted capital commitments:
|  |  | 2011 |  |  | 2012 |
| For construction of buildings | $ | 7,847,376 |  | $ | 10,820,593 |
| For purchases of equipment |  | 3,511,966 |  |  | 3,630,112 |
|  | $ | 11,359,342 |  | $ | 14,450,705 |
(ii) | Land Use Rights and Property Ownership Certificate
| According to the relevant PRC laws and regulations, a land use rights certificate, along with government approvals for land planning, project planning and construction, needs to be obtained before construction of a building is commenced. A property ownership certificate shall be granted by the government upon application under the condition that the aforementioned certificate and government approvals have been obtained.
| The Company did not obtain the land use right certificate and approvals for project-planning and construction relating to the premises occupied by the Company, BAK Industrial Park, before construction of the buildings was commenced. On July 3, 2009, the Company had obtained the approval for project-planning and construction from the local government of Shenzhen. On June 2, 2011, the Company obtained the property ownership certificate relating to BAK Industrial Park.
| Pursuant to the land use rights certificate relating to the Company’s Tianjin facility, the Tianjin government had requested that the Company complete the construction of the Tianjin facility before September 30, 2008. As of September 30, 2012, the Company was in the process of negotiating with the relevant government bureau for the extension of the completion date. If the Company fails to obtain the approval for the extension of the completion date from the relevant government bureau, there is a risk that the land use rights certificate relating to the Company’s Tianjin facility will become invalid. However, management believes that this possibility, while present, is remote.
| Pursuant to the land use rights certificate that the Company obtained relating to the Research and Development Test Centre to be constructed in Shenzhen, the Company must complete at least 25% of the construction of the Research and Development Test Centre by September 30, 2008. On November 11, 2008 and May 27, 2009, the Company has signed two supplemental agreements with the Shenzhen government to increase the dimensions of the Research and Development Test Centre. According to the supplement agreements, the Company is required to complete the construction by May 6, 2011. According to the property ownership and land use rights certificate, such rights may not be pledged without the approval of the relevant government office. The Company is required to pledge its property ownership and land use rights certificate in relation to the Research and Development Test Centre to China Development Bank according to the loan agreement entered into with it. On April 7, 2010, the pledge of the land use rights certificate to China Development Bank was approved by the relevant government bureau. On April 20, 2010, the relevant land use rights certificate was pledged to China Development Bank. As of September 30, 2012, the Company has not obtained the related property ownership certificate.
| On August 20, 2010, the Company purchased the insurance for its manufacturing facilities at BAK Industrial Park in Shenzhen, China. Under the insurance policy entered into with Ping An Property & Casualty Insurance Company of China, Ltd, the insured amount for the Company&#8217;s manufacturing facilities at BAK Industrial Park is RMB550,000,000 (approximately $82.2 million) for the period from August 26, 2010 to March 26, 2012. On March 26, 2012, the Company purchased the new insurance for its manufacturing facilities at BAK Industrial Park in Shenzhen, China. Under the insurance policy entered into with Ping An Property & Casualty Insurance Company of China, Ltd, the insured amount for the Company&#8217;s manufacturing facilities at BAK Industrial Park is RMB663,612,000 (approximately $105.4 million) for the period from March 27, 2012 to July 26, 2013.
| On July 2, 2010, the Company purchased insurance for its manufacturing facilities in Tianjin, China. Under the insurance policy entered into with Ping An Property & Casualty Insurance Company of China, Ltd, the insured amount for the Company&#8217;s manufacturing facilities in Tianjin is RMB220,991,420 (approximately US$33.0 million) for the period from July 2, 2010 to July 2, 2011. The Company purchased another insurance, upon the expiry of this insurance, under the insurance policy entered into with Ping An Property & Casualty Insurance Company of China, Ltd, the insured amount for Company&#8217;s manufacturing facilities in Tianjin is RMB329,666,477 (approximately US$51.6 million) for the period from July 2, 2011 to July 2, 2012. Upon the expiry of this insurance, the Company had new insurance policy entered into with Ping An Property & Casualty Insurance Company of China, Ltd, the insured amount for Company&#8217;s manufacturing facilities in Tianjin is RMB260,142,199 (approximately US$40.9 million) for the period from July 2, 2012 to July 2, 2013.
| The Company is not able to insure its new Research and Development Test Centre to be constructed in Shenzhen, China, until it receives the required property ownership and land use rights certificates. Upon receipt of such certificates, the Company intends to procure such insurance. As discussed above, the Company has obtained the land use rights certificate to the land relating to these facilities. The application for a property ownership certificate is in process with respect to the Company’s facilities in Shenzhen.
(iii) | Guarantees
In order to secure the supplies of certain raw materials and equipment and upon the request of suppliers, the Company has given guarantees to certain suppliers which are summarized as follows:
|  |  | 2011 |  |  | 2012 |
| Guaranteed for Shenzhen Tongli Hi-tech Co. Ltd. - a non-related party | $ | 2,349,514 |  | $ | 2,386,369 |
| Guaranteed for Tianjin Huaxiahongyuan Ltd. - a non-related party |  | - |  |  | 2,386,369 |
| Guaranteed for Shanghai Global Children Products Co. Ltd. - a non-related party |  | 1,566,342 |  |  | - |
| Guaranteed for Shenzhen Yasu Technology Co. Ltd. - a non-related party |  | 9,398,055 |  |  | 9,545,476 |
| Guaranteed for Shenzhen Langjin Technology Development Co. Ltd. - a non-related party |  | - |  |  | 9,545,476 |
|  | $ | 13,313,911 |  | $ | 23,863,690 |
| The Company has also guaranteed the loans of a related party under the common control of Mr. Xiangqian Li in the amount of approximately US$7.8 million and US$11.2 million as of September 30, 2011 and 2012, respectively.
| Management has assessed the fair value of the obligation arising from the above financial guarantees and considered it is immaterial to the consolidated financial statements. Therefore, no obligations in respect of the above guarantees were recognized as of September 30, 2012.
(iv) | Outstanding Discounted Bills and Transferred Bills
| From time to time, the Company factors bills receivable to banks and endorses the bank acceptance bills received to its suppliers, vendors or other parties for settlement of its liabilities to these creditors. At the time of the factoring and transfer, all rights and privileges of holding the receivables are transferred to the banks and the creditors. The Company removes the assets from its books and records a corresponding expense for the amount of the discount. The Company remains contingently liable on the amount outstanding in the event the bill issuer defaults.
The Company's outstanding discounted and transferred bills as of September 30, 2011 and 2012 are summarized as follows:
|  |  | 2011 |  |  | 2012 |
| Bank acceptance bills | $ | 2,049,540 |  | $ | 21,962,849 |

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- Definition The entire disclosure for commitments and contingencies. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 460 -SubTopic 10 -Section 50 -Paragraph 8 -URI http://asc.fasb.org/extlink&oid=6398077&loc=d3e12565-110249 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 450 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6952336&loc=d3e14435-108349 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 14 -Paragraph 3 -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 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6394976&loc=d3e25287-109308 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.25) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 5 -Paragraph 9, 10, 11, 12 -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. + Details
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