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PROPERTY AND EQUIPMENT

3 Months Ended

Mar. 31, 2014

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	March 31,			December 31,
	2014			2013
Permit of land use	$	457,111		$	460,964
Building		2,473,773			2,494,623
Plant, machinery and equipment		6,609,282			6,671,620
Motor vehicle		150,403			151,670
Office equipment		235,371			229,210
Construction in progress		29,009,843			25,497,600
Total		38,935,783			35,505,687
Less: accumulated depreciation		(5,420,743	)		(5,264,350	)
Property and Equipment, net	$	33,515,040		$	30,241,337

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
	Ended March 31,
	2014		2013
Total interest cost incurred	$	276,215	$	82,445
Interest cost capitalized		219,768		-
Interest expense	$	56,447	$	82,445

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 three months ended March 31, 2014 and 2013, depreciation expense was $201,909 and $214,406, 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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