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Lease | 9 Months Ended
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Sep. 30, 2021
Lease Disclosure [Abstract] |
Lease |
11. | Lease
| (a) | Right-of-use assets
Right-of-use assets as of September 30, 2021 consisted of the followings:
|  | Prepaid land lease payments |
Balance as of January 1, 2021 |  | $ | 7,500,780 |
Amortization charge for the period |  |  | (130,211 | )
Foreign exchange adjustment |  |  | 94,857 |
Balance as of September 30, 2021 |  | $ | 7,465,426 |
Lump sum payments were made upfront to acquire the leased land from the owners with lease period for 50 years up to August 9, 2064, and no ongoing payments will be made under the terms of these land leases.
| (b) | Company as Lessor
The Company derives a portion of its revenue from leasing arrangements of these vehicles to end users. Such arrangements provide for monthly payments covering the vehicles sales and interest. These arrangements meet the criteria to be accounted for as sales-type leases. Accordingly, vehicle sale net of cost is recorded as other income and recognized upon delivery of the vehicle and its acceptance by the end user. Upon the recognition of such revenue, an asset is established for the investment in sales-type leases. Interests are recognized monthly over the lease term. The components of the net investment in sales-type leases as of December 31, 2020 and September 30, 2021 are as follows:
|  | December 31, |  |  | September 30, |
|  | 2020 |  |  | 2021 |
Total future minimum lease payments receivable |  | $ | 1,210,305 |  |  | $ | 1,950,163 |
Less: unearned income, representing interest |  |  | (124,653 | ) |  |  | (130,783 | )
Present value of minimum lease payments receivables |  |  | 1,085,652 |  |  |  | 1,819,380 |
Less: Current portion |  |  | (235,245 | ) |  |  | (838,649 | )
Non-current portion |  | $ | 850,407 |  |  | $ | 980,731 |
Vehicle sale net of cost recognized in other income (expense) from vehicle leasing was $(6) and $(91,999) for the three and nine months ended September 30, 2021, respectively. Interest income from vehicle leasing was $25,674 and $96,702 for the three and nine months ended September 30, 2021, respectively The future minimum lease payments receivable for sales type leases are as follows:
12 months ending September 30, |  | Total Minimum Lease Payments to be Received |  |  | Amortization of Unearned Income |  |  | Net Investment in Sales Type Leases |
2022 |  | $ | 919,238 |  |  | $ | 80,589 |  |  | $ | 838,649 |
2023 |  |  | 678,840 |  |  |  | 42,903 |  |  |  | 635,937 |
2024 |  |  | 352,085 |  |  |  | 7,291 |  |  |  | 344,794 |
2025 |  |  | - |  |  |  | - |  |  |  | - |
2026 |  |  | - |  |  |  | - |  |  |  | - |
Thereafter |  |  | - |  |  |  | - |  |  |  | - |
|  | $ | 1,950,163 |  |  | $ | 130,783 |  |  | $ | 1,819,380 |
| (c) | Operating lease
On January 14, 2021, Nanjing Daxin entered into a lease agreement for manufacturing, warehouse and office space in Tianjing with a three year term, commencing on March 1, 2021 and expiring on February 29, 2024. The monthly rental payment is approximately $11,346 (RMB73,143) per month. On April 6, 2021, Nanjing CBAK entered into a lease agreement for warehouse space in Nanjing with a three year term, commencing on April 15, 2021 and expiring on April 14, 2024. The monthly rental payment is approximately $15,162 (RMB97,743) per month. On June 1, 2021, Nanjing Daxin entered into a lease agreement for manufacturing, warehouse and office space in Wuxi with a three year term, commencing on June 1, 2021 and expiring on May 31, 2024. The monthly rental payment is approximately $36,933 (RMB238,095) per month for the first year and approximately $43,089 (RMB277,778) per month from the second year. The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2021:
|  | Operating leases |
12 months ending September 30, |  |  |
2022 |  | $ | 835,158 |
2023 |  |  | 835,158 |
2024 |  |  | - |
2025 |  |  | - |
Thereafter |  |  | - |
Total undiscounted cash flows |  |  | 1,670,316 |
Less: imputed interest |  |  | (115,646 | )
Present value of lease liabilities |  | $ | 1,554,670 |
Lease term and discount rate |  |  |
|  | September 30, 2021 |
Weighted-average remaining lease term - years |  |  | 2.69 |
Weighted-average discount rate (%) |  |  | 6.175 | %
Operating lease expenses for the three and nine months ended September 30, 2020 and 2021 for the capitation agreement was as follows:
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2020 |  |  | 2021 |  |  | 2020 |  |  | 2021 |
Operating lease cost – straight line |  |  | - |  |  |  | 175,932 |  |  |  | - |  |  |  | 290,051 |
Total lease expense |  |  | - |  |  |  | 175,932 |  |  | $ | - |  |  | $ | 290,051 |

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