Right-of-Use Assets and Lease Liabilities

9 Months Ended

Dec. 31, 2019

Right Of Use Assets And Lease Liabilities [Abstract]

RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

NOTE 9. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

On April 1, 2019, the Company adopted FASB ASC 842, "Leases" ("new lease standard"). The new lease standard was adopted using the optional transition method approach that allows for the cumulative effect adjustment to be recorded without restating prior periods. The Company has elected the practical expedient package related to the identification, classification and accounting for initial direct costs whereby prior conclusions do not have to be reassessed for leases that commenced before the effective date. As the Company will not reassess such conclusions, the Company has not adopted the practical expedient to use hindsight to determine the likelihood of whether a lease will be extended or terminated or whether a purchase option will be exercised.

Operating lease

In November 2017, Tianci Liangtian leased office space from November 20, 2017 to December 5, 2018 under an operating lease agreement (approximately 666 square meters). Under the terms of the lease, Tianci Liangtian paid approximately $1,592 in lease deposits and committed to make annual lease payments. In December 2018, Yuxingqi renewed the lease agreement. Under the terms, Yuxingqi committed to make annual lease payments of RMB290,000 (approximately US$42,000) for the period from December 6, 2018 to December 5, 2019. On December 20, 2019, Yuxingqi renewed the lease agreement. Under the terms, Yuxingqi committed to make annual lease payments of RMB290,000 (approximately US$42,000, including AVT tax) for the period from December 20, 2019 to December 19, 2020. RMB150,000 (approximately US$22,000) payment was paid on December 23, 2019. As of December 31, 2019, US$35,991 and US$18,955 was accounted as operating lease right-of-use assets and operating lease liabilities (current), respectively

In April 2018, Lvxin leased office space of approximately 177 square meters under a one-year lease agreement. Lvxin paid approximately US$4,500 (RMB30,000) as rent. The office contained our administrative functions, sales, e-commerce operations and marketing functions. After April 2019, Lvxin did not renew this office lease agreement.

The Company leases 1,228 acres of land for cultivating pursuant to more than 300 lease agreements with individual farmers. Some of the leases are paid annually, and some of the leases are paid in advance for periods from 2 to 22 years. These prepayments reduced the related lease liabilities. The Company accounts for the land rental costs as a cost of production of paddy.

The Company's adoption of the new lease standard included new processes and controls regarding asset financing transactions, financial reporting and a system-related implementation required for the new lease standard. The impact of the adoption of the new lease standard included the recognition of right-of-use ("ROU") assets and lease liabilities. The adoption of the new lease standard resulted in additional net lease assets and net lease liabilities of approximately $2.2 million, respectively, as of April 1, 2019. For the three and nine months ended December 31, 2019, the amortization was $9,711 and $397,341, respectively.

Operating leases are reflected on our balance sheet within ROU assets and the related current and non-current operating lease liabilities. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease agreement. ROU assets and liabilities are recognized at the commencement date, or the date on which the lessor makes the underlying asset available for use, based upon the present value of the lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectation regarding the terms.

As of December 31, 2019, the Company has the following amounts recorded on the Company's unaudited condensed consolidated balance sheet:

	As of December 31, 2019
	(Unaudited)
Assets
Right-of-use asset(non-current)	$	2,107,807
Total	$	2,107,807
Liabilities
Lease liability(current)	$	327,169
Lease liability(non-current)		1,500,402
Total	$	1,827,571

Office lease:
Remaining Lease Term	1 year, renewal option
Incremental borrowing rate	4.9%
Land lease:
Remaining Lease Term	From 1 to 10 years, no renewal option
Incremental borrowing rate	4.9%

The components of lease expense were as follows:

	For the nine months ended December 31, 2019
	(Unaudited)
Amortization of ROU Asset
Land lease	$	367,752
Office Lease		29,589
Interest expense		-
Total lease expense	$	397,341

Future annual minimum lease payments for non-cancellable operating leases are as follows:

	Operating Leases (Unaudited)
From April 2020 to March 2021	$	415,791
From April 2021 to March 2022		352,346
From April 2022 to March 2023		276,845
From April 2023 to March 2024		198,196
From April 2024 to March 2025		210,290
Thereafter		773,791
Total		2,227,259
Less: imputed interest		399,688
Total	$	1,827,571
Reconciliation to lease liabilities:
Lease liabilities - current	$	327,169
Lease liabilities - long-term		1,500,402
Total Lease Liabilities	$	1,827,571