PROPERTY, PLANT AND EQUIPMENT UNDER CAPITAL LEASES, NET

12 Months Ended

Dec. 31, 2011

PROPERTY, PLANT AND EQUIPMENT UNDER CAPITAL LEASES, NET

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT UNDER CAPITAL LEASES, NET

Property, plant and equipment under capital leases, net consist of the following:

	As of December 31,
	2011			2010
At cost:
Buildings	$	130,605		$	-
Plant and machinery		2,476,460			-
Total		2,607,065			-
Less: accumulated depreciation and amortization		(270,145	)		-
Net book value	$	2,336,920		$	-

The above buildings erected on parcels of land located in Shouguang, PRC, are collectively owned by local townships. The Company has not been able to obtain property ownership certificates over these buildings as the Company could not obtain land use rights certificates on the underlying parcels of land.

During the year ended December 31, 2011, depreciation and amortization expense totaled $265,057, of which $172,103 and $92,954 were recorded as cost of sales and administrative expenses respectively.

An impairment of $683,046 was made in the second quarter of 2011 for those idle assets without enhancements and adjustments been performed in early 2011, and included in write-off / impairment on property, plant and equipment.