PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2013

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	December 31,			December 31,
	2013			2012
Permit of land use	$	460,964		$	447,013
Building		2,494,623			2,419,125
Plant, machinery and equipment		6,671,620			6,381,209
Motor vehicle		151,670			147,080
Office equipment		229,210			222,273
Construction in progress		25,497,600			3,688,567
Total		35,505,687			13,305,267
Less: accumulated depreciation		(5,264,350	)		(4,273,373	)
Property and Equipment, net	$	30,241,337		$	9,031,894

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

	For the Years
	Ended December 31,
	2013		2012
Total interest cost incurred	$	583,400	$	308,375
Interest cost capitalized		234,704		-
Interest expense	$	348,696	$	308,375

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

Depreciation relating to office equipment was included in general and administrative expenses, while all other depreciation was included in cost of revenue. For the years ended December 31, 2013 and 2012, depreciation expense was $846,512 and $851,047, 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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