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4. PREPAID LAND LEASE | 9 Months Ended
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Sep. 30, 2013
Notes to Financial Statements |
4. PREPAID LAND LEASE | The Company prepaid for land leases with lease terms for periods ranging from one to fifty years to use the land on which the office premises, production facilities and warehouses of the Company are situated. The prepaid land lease is amortized on a straight line basis. During the three-month periods ended September 30, 2013 and 2012, amortization of prepaid land lease totaled $229,262 and $193,859, respectively, which were recorded as cost of net revenue. During the nine-month periods ended September 30, 2013 and 2012, amortization of prepaid land lease totaled $419,180 and $298,910, respectively, which were recorded as cost of net revenue. The Company has the rights to use certain parcels of land located in Shouguang, the PRC, through lease agreements signed with local townships. Such parcels of land are collectively owned by local townships and accordingly, the Company could not obtain land use rights certificates on these parcels of land. The parcels of land that the Company could not obtain land use rights certificates cover a total of approximately 59.39 square kilometers with an aggregate carrying value of $994,985 and approximately 59.39 square kilometers with an aggregate carrying value of $753,086 as at September 30, 2013 and December 31, 2012, respectively.

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