PRODUCTION COSTS

12 Months Ended

Dec. 31, 2011

7. PRODUCTION COSTS



Beginning balance for completed films as of January 1	9,662,234		7,714,809
Addition	14,347,688		57,705,841
Amortization	(16,502,364	)	(37,116,065	)
Exchange difference	207,251		521,054

Subtotal for completed films	7,714,809		28,825,639

Beginning balance for films in production and not released as of January 1	9,866,326		57,101,069
Addition	61,375,450		40,236,802
Transfer to completed films	(14,347,688	)	(57,705,841	)
Exchange difference	206,981		1,387,153

Subtotal for films in production and not released	57,101,069		41,019,183

Ending balance as December 31	64,815,878		69,844,822

In the year 2011, based on the economic performance and public acceptance of the films, the management decreased the estimate of the ultimate oversea revenue expected to be realized for three films and a TV series. As a result, the Group incurred additional amortization of $1,602,701 for the year ended December 31, 2011. The portion of the costs of the completed films that are expected to be amortized during the twelve months after December 31, 2011 is $16,961,177, and the Group expects to amortize 81% of such costs within three years from December 31, 2011.