PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2015

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	December 31,			December 31,
	2015			2014
Permit of land use	$	433,956		$	458,853
Building		10,557,234			11,279,704
Plant, machinery and equipment		27,325,440			28,358,694
Motor vehicle		242,860			150,976
Office equipment		256,679			268,521
Construction in progress		-			5,848
Total		38,816,169			40,522,596
Less: accumulated depreciation		(9,422,912	)		(6,640,718	)
Property and Equipment, net	$	29,393,257		$	33,881,878

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 building and machinery is in production and the facility is in use, the amount of construction in progress is moved into plant, machinery and equipment and depreciated. During the year ended December 31, 2014, an aggregate of approximately $25.5 million was reclassified from construction in progress to their respective property and equipment category as the assets were placed in service and depreciation commenced. A reconciliation of total interest cost incurred to interest expense as recognized in the consolidated statement of operations is as follows:

	For the Year
	Ended December 31,
	2015		2014
Total interest cost incurred	$	1,165,164	$	1,244,346
Interest cost capitalized		-		458,542
Interest expense	$	1,165,164	$	785,804

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 - 49
Plant, machinery and equipment		5 - 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, 2015 and 2014, depreciation expense was $3,280,618 and $1,399,396, respectively.