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4. PREPAID LAND LEASE | 3 Months Ended
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Mar. 31, 2014
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 March 31, 2014 and 2013, amortization of prepaid land lease totaled $104,972 and $98,215, 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 of which the Company could not obtain land use rights certificates covers a total of approximately 59.39 square kilometers of aggregate carrying value of $959,869 and approximately 59.39 square kilometers of aggregate carrying value of $761,496 as at March 31, 2014 and December 31, 2013, respectively.

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