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PROPERTY AND EQUIPMENT

9 Months Ended

Sep. 30, 2013

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	September 30,			December 31,
	2013			2012
Permit of land use	$	459,011		$	447,013
Building		2,484,053			2,419,125
Plant, machinery and equipment		6,636,747			6,381,209
Motor vehicle		151,028			147,080
Office equipment		233,649			222,273
Construction in progress		15,666,827			3,688,567
Total		25,631,315			13,305,267
Less: accumulated depreciation		(5,036,637	)		(4,273,373	)
Property and Equipment, net	$	20,594,678		$	9,031,894

Construction in progress consists primarily of the construction of a new production facility and the acquisition of related equipment and capitalized interest during the construction period. A reconciliation of total interest cost incurred to interest expense as recognized in the consolidated statement of operations is as follows:

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2013		2012		2013		2012
Total interest cost incurred		160,376		79,507		334,870		235,516
Interest cost capitalized		71,138		-		71,138		-
Interest expense		89,238		79,507		263,732		235,516

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Asset		Life - years
Permit of land use		40 - 70
Building		20 - 35
Plant, machinery and equipment		10
Motor vehicle		5 - 10
Office equipment		3-5

For the nine months ended September 30, 2013 and 2012, depreciation expense was $640,550 and $638,219, respectively.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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