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Lease | 6 Months Ended
--- | ---
Jun. 30, 2022
Lease Disclosure [Abstract] |
Lease | 9. Lease
(a) | Prepaid land use rights
|  | Prepaid |
|  | land |
|  | lease payments |
Balance as of January 1, 2021 |  | $ | 7,500,780 |
Addition for the year |  |  | 6,188,764 |
Amortization charge for the year |  |  | (189,044 | )
Foreign exchange adjustment |  |  | 296,730 |
Balance as of December 31, 2021 |  |  | 13,797,230 |
Amortization charge for the period |  |  | (175,907 | )
Foreign exchange adjustment |  |  | (703,204 | )
Balance as of June 30, 2022 |  | $ | 12,918,119 |
In August 2014 and November 2021, the Group acquired land use rights to build a factory of the Company in Dalian, PRC and Zhejiang, PRC. Lump sum payments were made upfront to acquire the leased land from the owners with lease periods of 36 to 50 years, and no ongoing payments will be made under the terms of these land leases. Amortization expenses of the prepaid land use rights were $43,477 and $86,189 for the three months ended June 30, 2021 and 2022 and $86,802 and $175,907 for the six months ended June 30, 2021 and 2022, respectively. No impairment loss was made to the carrying amounts of the prepaid land use right for the three and six months ended June 30, 2021 and 2022.
(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, 2021 and June 30, 2022 are as follows:
|  | December 31, |  |  |  | June 30, |
|  | 2021 |  |  | 2022 |
Total future minimum lease payments receivable |  | $ | 1,737,817 |  |  | $ |  | 1,427,591 |
Less: unearned income, representing interest |  |  | (108,773 | ) |  |  |  | (75,638 | )
Present value of minimum lease payments receivables |  |  | 1,629,044 |  |  |  |  | 1,351,953 |
Less: Current portion |  |  | (790,516 | ) |  |  |  | (859,348 | )
Non-current portion |  | $ | 838,528 |  |  | $ |  | 492,605 |
Loss on vehicle sale net of cost recognized in other income from vehicle leasing was $(160) and nil for the three months ended June 30, 2021 and 2022, respectively. Loss on vehicle sale net of cost recognized in other income from vehicle leasing was $(91,993) and nil for the six months ended June 30, 2021 and 2022, respectively. Interest income from vehicle leasing was $44,391 and $(573) for the three months ended June 30, 2021 and 2022, respectively. Interest income from vehicle leasing was $71,028 and $28,496 for the six months ended June 30, 2021 and 2022, respectively. The future minimum lease payments receivable for sales type leases are as follows:
Fiscal years ending |  |  | Total Minimum Lease Payments to be Received |  |  | Amortization of Unearned Income |  |  | Net Investment in Sales Type Leases |
Remainder of 2022 |  |  | $ | 597,665 |  |  | $ | 42,669 |  |  | $ | 554,996 |
2023 |  |  |  | 648,416 |  |  |  | 30,529 |  |  |  | 617,887 |
2024 |  |  |  | 181,510 |  |  |  | 2,440 |  |  |  | 179,070 |
2025 |  |  |  | - |  |  |  | - |  |  |  | - |
2026 |  |  |  | - |  |  |  | - |  |  |  | - |
Thereafter |  |  |  | - |  |  |  | - |  |  |  | - |
|  |  | $ | 1,427,591 |  |  | $ | 75,638 |  |  | $ | 1,351,953 |
(c) | Operating lease
On April, 2018, Hitrans entered into a lease agreement for staff quarters spaces in Zhejiang with a five year term, commencing on May 1, 2018 and expiring on April 30, 2023 The monthly rental payment is approximately RMB18,000 ($2,687) per month. In 2018, lump sum payments were made to landlord for the rental of staff quarter spaces and no ongoing payments will be made under the terms of these leases. 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 RMB73,143 ($10,918) per month. On February 28, 2022, Nanjing Daxin early terminated the lease after one-year non-cancellable period. 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 RMB97,743 ($14,590) 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 RMB238,095 ($35,540) per month for the first year and approximately RMB277,778 ($41,463) per month from the second year. In May, 2022, Nanjing Daxin early terminated the lease after one-year non-cancellable period. On June 1, 2021, Hitrans entered into a lease agreement with liquid gas supplier for a five year term for supplying liquid nitrogen and oxygen, commencing on July 1, 2021. The monthly rental payment is approximately RMB5,310 ($793) per month. On December 9, 2021, Hitrans entered into a lease agreement for extra staff quarters spaces in Zhejiang with a three year term, commencing on December 10, 2021 and expiring on December 9, 2024. The monthly rental payment is approximately RMB9,905 ($1,478) per month for the first year, RMB10,103 ($1,508) and RMB10,305 ($1,538) per month from the second year and third year, respectively. On March 1, 2022, Hitrans entered into a lease agreement for extra staff quarters spaces in Zhejiang with a five year term, commencing on March 1, 2022 and expiring on February 28, 2027. The monthly rental payment is approximately RMB15,840 ($2,364) per month for the first year, with 2% increase per year. Operating lease expenses for the three and six months ended June 30, 2021 and 2022 for the capitation agreement was as follows:
|  | Three months ended June 30, |  |  | Six months ended June 30, |
|  | 2021 |  |  | 2022 |  |  | 2021 |  |  | 2022 |
Operating lease cost – straight line |  | $ | 120,105 |  |  | $ | 145,966 |  |  | $ | 131,387 |  |  | $ | 358,657 |
Total lease expense |  | $ | 120,105 |  |  | $ | 145,966 |  |  | $ | 131,387 |  |  | $ | 358,657 |
The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2022 were as follows:
|  |  | Operating leases |
Remainder of 2022 |  |  | $ | 22,852 |
2023 |  |  |  | 231,987 |
2024 |  |  |  | 39,030 |
2025 |  |  |  | 39,621 |
2026 |  |  |  | 35,467 |
Thereafter |  |  |  | - |
Total undiscounted cash flows |  |  |  | 368,957 |
Less: imputed interest |  |  |  | (25,389 | )
Present value of lease liabilities |  |  | $ | 343,568 |
Lease term and discount rate:
|  | December 31, 2021 |  |  | June 30, 2022 |
Weighted-average remaining lease term |  |  |  |  |  |
Land use rights |  |  | 38.9 |  |  |  | 38.4 |
Operating leases |  |  | 2.32 |  |  |  | 2.91 |
Weighted-average discount rate |  |  |  |  |  |  |  |
Land use rights |  |  | Nil |  |  |  | Nil |
Operating leases |  |  | 5.88 | % |  |  | 5.43 | %
Supplemental cash flow information related to leases where the Company was the lessee for the three and six months ended June 30, 2021 and 2022 was as follows:
|  | Three months ended June 30, |  |  | Six months ended June 30, |
|  | 2021 |  |  | 2022 |  |  | 2021 |  |  | 2022 |
Operating cash outflows from operating assets |  | $ | 181,462 |  |  | $ | 182,944 |  |  | $ | 316,841 |  |  | $ | 215,395 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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