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Note 8 - Long Term Prepaid Expenses
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Jun. 30, 2012
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| Note 8 - Long Term Prepaid Expenses | NOTE 8 – LONG TERM PREPAID EXPENSES
Long term prepaid expenses include prepaid rent of RMB 7,279,510 (approximately $1,126,335) for a parcel of land covering 1.8 million square feet that includes production facilities covering an area of approximately 775,000 square feet, an office building covering an area of 19,375 square feet and a dormitory and cafeteria covering an area of 22,600 square feet located at Xi Lv Biao Industrial Park, Longdu Street, Zhucheng City, Shangdong Province, China. This parcel of land is leased by the Company from Zhucheng City, Lvbiao Town, West Lvbiao Village pursuant to the terms of a lease agreement dated January 30, 2006 which required a one-time payment of RMB 7,098,910 (approximately $1,096,610). The term of the lease begins on December 1, 2005 and expires on November 30, 2035. The Company amortizes its prepaid rent over the term of the lease.
On November 1, 2010, Ziyang Ceramics entered into a lease agreement with the Zhucheng City Zupan Villager Committee for the use of a parcel of land covering an area of 1,462,457 square feet located in Zhucheng City, Huanghua Town, China. Under the terms of the lease agreement, Ziyang Ceramics made a one-time payment of RMB 12,228,000 (approximately $1,859,000). The term of the lease begins on November 1, 2010 and expires on October 31, 2060. The Company amortizes its prepaid rent over the term of the lease.
On April 30, 2012, Ziyang Ceramics entered a 30-year land lease with West LvBiao Village located in LvBiao Town of Zhucheng City in Shandong Province, China. Pursuant to the lease, Ziyang Ceramics leased 24 acres of the land in West LvBiao Village for 30 years from May 1, 2012 to April 30, 2042. The one-time rent for the lease was RMB 32,170,600 (approximately $5,104,257 at the time of payment) and was due on May 10, 2012. We paid the full amount of the rent in the second quarter of 2012 and have recognized it as long-term prepaid rental assets on the property.
At June 30, 2012 and December 31, 2011, long term prepaid expenses are as follows:
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