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INTANGIBLE ASSETS
3 Months Ended
Sep. 30, 2012
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 8 - INTANGIBLE ASSETS

 

Intangible assets consist of the following:

 

    September 30,     June 30,  
    2012     2012  
Land use rights, net   $ 11,858,140     $ 11,014,591  
Technology patent, net     909,075       1,902,131  
Customer relationships, net     7,980,824       8,253,368  
Non-compete agreement, net     114,781       125,453  
Trademarks     6,311,123       6,323,098  
Total   $ 27,173,943     $ 27,618,641  

 

LAND USE RIGHT

 

On September 25, 2009, Yuxing was granted a land use right for approximately 88 acres (353,000 square meters or 3.8 million square feet) by the People’s Government and Land & Resources Bureau of Hu County, Xi’an, Shaanxi Province. The fair value of the related intangible asset was determined to be the respective cost of RMB 73,184,895 (or $11,570,532). The intangible asset is being amortized over the grant period of 50 years using the straight line method.

 

On August 13, 2003, Tianjuyuan was granted a certificate of Land Use Right for a parcel of land of approximately 11 acres (42,726 square meters or 459,898 square feet) at Ping Gu District, Beijing. The purchase cost was recorded at RMB1,045,950 (or $165,365). The intangible asset is being amortized over the grant period of 50 years.

 

On August 16, 2001, Jinong received a land use right as a contribution from a shareholder, which was granted by the People’s Government and Land & Resources Bureau of Yanling District, Shaanxi Province. The fair value of the related intangible asset at the time of the contribution was determined to be RMB 7,285,099 (or $1,151,774). The intangible asset is being amortized over the grant period of 50 years.

 

The Land Use Rights consist of the following:

 

    September 30,     June 30,  
    2012     2012  
Land use rights   $ 12,887,671     $ 12,912,125  
Less: accumulated amortization     (1,029,531 )     (1,897,534 )
Total land use rights, net   $ 11,858,140     $ 11,014,591  

 

TECHNOLOGY PATENT

 

On August 16, 2001, Jinong was issued a technology patent related to a proprietary formula used in the production of humid acid. The fair value of the related intangible asset was determined to be the respective cost of RMB 5,875,068 (or $928,848) and is being amortized over the patent period of 10 years using the straight line method.

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired technology patent was estimated to be RMB 9,200,000 (or $1,454,520) and is amortized over the remaining useful life of six years using the straight line method.

 

The technology know-how consisted of the following:

 

    September 30,     June 30,  
    2012     2012  
Technology know-how   $ 2,383,368     $ 2,387,891  
Less: accumulated amortization     (1,474,293 )     (485,760 )
Total technology know-how, net   $ 909,075     $ 1,902,131  

 

CUSTOMER RELATIONSHIP

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired customer relationships was estimated to be RMB 65,000,000 (or $10,276,500) and is amortized over the remaining useful life of ten years.

 

    September 30,     June 30,  
    2012     2012  
Customer relationships   $ 10,276,500     $ 10,296,000  
Less: accumulated amortization     (2,295,676 )     (2,042,632 )
Total customer relationships, net   $ 7,980,824     $ 8,253,368  

 

NON-COMPETE AGREEMENT

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired non-compete agreement was estimated to be RMB 1,320,000 (or $208,692) and is amortized over the remaining useful life of five years using the straight line method.  

 

    September 30,     June 30,  
    2012     2012  
Non-compete agreement   $ 208,692     $ 209,088  
Less: accumulated amortization     (93,911 )     (83,635 )
Total non-compete agreement, net   $ 114,781     $ 125,453  

 

TRADEMARKS

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired trademarks was estimated to be $6,311,123, an equivalent amount in U.S. dollars to an amount of RMB 40,700,000, and is subject to an annual impairment test.

 

Total amortization expenses of intangible assets for the three months ended September 30, 2012 and 2011 amounted to $392,390 and $331,502, respectively.

 

AMORTIZATION EXPENSE

 

Estimated amortization expenses of intangible assets for the next five (5) years after September 30, 2012, are as follows:

 

Year Ends   Expense ($)  
September 30, 2013     1,662,447  
September 30, 2014     1,662,447  
September 30, 2015     1,662,447  
September 30, 2016     1,620,708  
September 30, 2017     1,378,288