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Property, Plant and Equipment, net, Prepaid Land Use Rights, net and Intangible Assets, net
 6 Months Ended
Mar. 31, 2013
Property, Plant and Equipment, net, Prepaid Land Use Rights, net and Intangible Assets, net [Text Block]

6. Property, Plant and Equipment, net, Prepaid Land Use Rights, net and Intangible Assets, net

(a) Property, plant and equipment as of September 30, 2012 and March 31, 2013 consisted of the following:

      September 30,     March 31,  
      2012     2013  
  Buildings $ 115,034,342   $ 111,718,629  
  Machinery and equipment   168,947,314     168,796,297  
  Office equipment   2,624,137     2,668,477  
  Motor vehicles   1,486,337     1,558,017  
      288,092,130     284,741,420  
  Accumulated depreciation   (102,766,292 )   (113,590,590 )
  Construction in progress   51,714,066     71,104,788  
  Prepayment for acquisition of property, plant and equipment   1,717,991     4,448,084  
               
  Carrying amount $ 238,757,895   $ 246,703,702  

(i) Depreciation expense for the six months ended March 31, 2012 and 2013 is included in the condensed consolidated statements of operations and comprehensive loss as follows:

    Three months ended March 31,     Six months ended March 31,  
    2012     2013     2012     2013  
Cost of revenues $ 3,703,196   $ 3,452,718   $ 7,411,674   $ 7,394,523  
Research and development expenses   149,438     143,699     289,785     280,416  
Sales and marketing expenses   43,096     34,271     86,861     66,853  
General and administrative   817,095     809,784     1,639,477     1,616,449  
expenses                        
  $ 4,712,825   $ 4,440,472   $ 9,427,797   $ 9,358,241  

(ii) Construction in Progress

Construction in progress mainly comprises capital expenditures for construction of the Company’s new corporate campus, including offices, factories and a Research and Development Test Centre.

For the three months ended March 31, 2012 and 2013, the Company capitalized interest of $645,499 and $659,803 respectively to the cost of construction in progress.

For the six months ended March 31, 2012 and 2013, the Company capitalized interest of $770,353 and $1,369,663 respectively to the cost of construction in progress.

(iii) Impairment charge

During the course of the Company’s strategic review of its operations, the Company assessed the recoverability of the carrying value of certain property, plant and equipment which resulted in impairment losses of $11.4 million and $11.4 million for the three and six months ended March 31, 2013, respectively, and of nil and $2.7 million for the three and six months ended March 31, 2012, respectively. The impairment charge represented the excess of carrying amounts of the Company’s property, plant and equipment over the estimated discounted cash flows expected to be generated by the Company’s production facilities in Shenzhen primarily for the production of aluminum-case cells.

(b) Prepaid land use rights

Prepaid land use rights as of September 30, 2012 and March 31, 2013 consisted of the followings:

             
    September 30,     March 31,  
    2012     2013  
             
Prepaid land use rights $ 36,977,372   $ 37,442,597  
Accumulated amortization   (4,473,511 )   (4,690,061 )
  $ 32,503,861   $ 32,752,536  

Amortization expenses of the prepaid land use rights were $285,246 and $391,519 for the three months ended March 31, 2012 and 2013 and $538,783 and $577,454 for the six months March 31, 2012 and 2013 respectively.

The Company has committed to pledge its construction in progress and land use rights certificate relating to the Company’s Research and Development Test Centre (Note 7) to China Development Bank with the net carrying amount of $40,723,035 as of March 31, 2013. 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.

On March 12, 2012, the Company borrowed a non-interest bearing loan in the amount of approximately $13,402,926 from a third-party Tianjin Zhantuo International Trading Co., Ltd. The Company has pledged one portion of its land use right located in Tianjin Industrial Park Zone with net book value of $9,577,458 to Tianjin Zhantuo International Trading Co., Ltd.

(c) Intangible Assets, net

Intangible assets as of March 31, 2013 and September 30, 2012 consist of the following:

    September 30,     March 31,  
    2012     2013  
             
Trademarks, computer software and technology $ 1,073,138   $ 1,422,468  
Less: Accumulated amortization   (445,075 )   (1,195,678 )
  $ 628,063   $ 226,790  

Intangible assets represent the trademarks, computer software and technology used for battery production and research.

Amortization expenses were $332,257 and $54,149 for the three months ended March 31, 2012 and 2013 and $360,239 and $86,817 for six months ended March 31, 2012 and 2013 respectively.