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3. PREPAID LAND LEASE | 6 Months Ended
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Jun. 30, 2014
Notes to Financial Statements |
3. 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 period ended June 30, 2014 and 2013, amortization of prepaid land lease totaled $96,439 and $91,703, respectively, which were recorded as cost of net revenue. During the six-month period ended June 30, 2014 and 2013, amortization of prepaid land lease totaled $201,411 and $189,918, 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 $1,167,487 and approximately 59.39 square kilometers with an aggregate carrying value of $761,496 as at June 30, 2014 and December 31, 2013, respectively.

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