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Property, Plant and Equipment and Construction in Progress
 12 Months Ended
Dec. 31, 2022
Property, Plant and Equipment [Abstract]  
PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION IN PROGRESS

NOTE 8 – PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION IN PROGRESS

 

(a) As of December 31, 2022 and 2021, property, plant and equipment consisted of the following:

 

   As of 
   December 31,
2022		   December 31,
2021		 
Buildings  $11,781,256   $12,751,105 
Machinery   21,010,613    21,930,452 
Motor vehicles   315,708    341,697 
Electronic equipment   223,806    206,122 
Fixed assets decoration*   
-
    
-
 
Total property plant and equipment, at cost   33,331,383    35,229,376 
           
Less: accumulated depreciation   (17,763,247)   (16,679,022)
Property, plant and equipment, net  $15,568,136   $18,550,354 
Construction in process   17,078    407,199 
Total  $15,585,214   $18,957,553 

 

For the years ended December 31, 2022 and 2021, depreciation expense amounted to $2.44 million and $2.51 million, respectively, of which $1.47 million and $1.53 million, respectively, was included in cost of revenue and inventories, and the remainder was included in general and administrative expense, respectively.

 

For the years ended December 31, 2022 and 2021, $0.38 million and $0 million of construction in progress were converted into fixed assets.

 

Restricted assets consist of the following:

 

   As of 
   December 31,
2022		   December 31,
2021		 
Buildings, net  $9,599,313   $11,314,916 
Machinery, net   
-
    2,201,707 
Total   9,599,313    13,516,623 

  

As of December 31, 2022, 2022, the Company pledged its ownership interests in certain buildings for the book value of RMB65.00 million ($9.14 million) as security to ABC Xinchang and Rural Commercial Bank of PRC Co., Ltd., for loan facilities with an aggregate maximum principal amount of RMB167.73 million.

 

On January 3, 2019, the Company sold a set of manufacturing equipment to third parties for aggregate proceeds of $3.08 million (RMB21.25 million) and the Company entered into lease agreements under which the Company agreed to lease back each of the properties for an initial term of 3 years.

 

On April 26, 2019, the Company sold various equipment including the general assembly line and the differential assembly line to third parties for aggregate proceeds of $2.12 million (RMB14.66 million) and the Company entered into lease agreements under which the Company agreed to lease back each of the properties for an initial term of 2 years.

 

On May 27, 2020, the Company sold various equipment including the general assembly line and the differential assembly line to third parties for aggregate proceeds of $1.42 million (RMB10.00 million) and the Company entered into lease agreements under which the Company agreed to lease back each of the properties for an initial term of 2 years.

 

The Company determined that it did not relinquish control of the assets to the buyer-lessor. Therefore, the Company accounted for the transactions as failed sale-leaseback transactions whereby the Company continues to depreciate the assets and recorded a financing obligation for the consideration received from the buyer-lessor.