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PROPERTY, PLANT AND EQUIPMENT, NET
 12 Months Ended
Dec. 31, 2021
Property, Plant and Equipment [Abstract]  
PROPERTY, PLANT AND EQUIPMENT, NET

NOTE 5— PROPERTY, PLANT AND EQUIPMENT, NET

 

   December 31,
2021		   December 31,
2020		 
Buildings  $13,514   $10,330,767 
Machinery, equipment and furniture   45,948    5,830,470 
Construction in progress   11,778,957    - 
Subtotal   11,838,419    16,161,237 
Less: accumulated depreciation   (5,117)   (6,670,042)
Property, plant and equipment, net  $11,833,302   $9,491,195 

 

Depreciation expense was $5,117 and $979,999 for the years ended December 31, 2021 and 2020, respectively.

 

Pursuant to local PRC government guidelines on local environment issues and the national overall plan, Sichuan Wetouch is under the government directed relocation order to relocate no later than December 31, 2021 and received compensation accordingly. On March 18, 2021, pursuant to the agreement with the local government and an appraisal report issued by a mutual agreed appraiser, Sichuan Wetouch received a compensation of RMB115.2 million ($18.1 million) (“Compensation Funds”) for the withdrawal of the right to use of state-owned land and the demolition of all buildings, facilities, equipment and all other appurtenances on the land. During the year ended December 31, 2021, the Company recorded a gain of $7,648,423 for the asset disposal including $872,045 loss of asset disposal of intangible assets (see Note 6).

 

On March 16, 2021, in order to minimize interruption of our business, Sichuan Vtouch entered into a leasing agreement with Sichuan Renshou Shigao Tianfu Investment Co., Ltd., a limited company owned by the local government, to lease the property, and all buildings, facilities and equipment thereon (“Demised Properties) of Sichuan Wetouch, commencing from April 1, 2021 until December 31, 2021, at a monthly rent of RMB300,000 ($47,076) for the use of the Demised Properties.