Note 6 - Intangible Assets

9 Months Ended

Sep. 30, 2011

Intangible Assets Disclosure [Text Block]

Note 6 - Intangible Assets

Intangible assets consisted of land use right, trademark and customer relationship. All land in the PRC is government-owned and cannot be sold to any individual or company. However, the government grants the user a “land use right” to use the land. The Company acquired the right to use land in Dongguan, Guangdong Province, China, in 2004 for 50 years and is amortizing such rights on a straight-line basis for 50 years.

The Company acquired a customer relationship with a fair value of $50,000 on August 31, 2011, as part of its acquisition of Diamond Bar. Concurrently with its acquisition of Diamond Bar, the Company entered into a trademark purchase and assignment agreement for all rights, title and interest in two registered U.S. trademarks (Diamond Sofa and Diamond Furniture) for $200,000 paid in full at the closing. Amortization of customer relationship and trademark is provided using the straight-line method and estimated lives were 5 and 10 years.

Intangible assets consisted of the following at September 30, 2011, and December 31, 2010, respectively:

	2011			2010
Land use right	$	567,340		$	544,399
Customer relationship		50,000			-
Trademark		200,000			-
Less: Accumulated amortization		(86,655	)		(72,587	)
Net	$	730,685		$	471,812

Amortization of intangible assets was $10,823 and $7,945 for the nine months ended September 30, 2011 and 2010, respectively, and $5,311 and $2,663 for the three months ended September 30, 2011 and 2010, respectively. Annual amortization expense for the next five years from September 30, 2011, is expected to be approximately $41,100, $41,100, $41,100, $41,100 and $40,300, respectively.