PROPERTY, PLANT AND EQUIPMENT, NET, AND LAND USE RIGHTS

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT, NET, AND LAND USE RIGHTS

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT, NET, AND LAND USE RIGHTS 

Property, plant and equipment, net at December 31, 2016 and 2015 are summarized as follows (in thousands):

	December 31, 2016			December 31, 2015
Buildings and improvements	$	18,939		$	20,260
Machinery and equipment		45,811			47,917
Office furniture and equipment		766			853
Vehicles		575			739
		66,091			69,769
Less:
Accumulated depreciation and amortization		(37,354	)		(33,876	)
Impairment losses recognized in profit and loss		(12,480	)		-
	$	16,257		$	35,893

Due to the increased competition in the auto manufacturing industry and the high cost of lithium battery, the net sales of Jonway Auto decreased significantly during the year ended December 31, 2016. The Company’s current sales volume and gross margin for the electronic vehicles could not justify the carrying value of the related long-lived asset or asset group, therefore, the Company recorded an impairment charge of $12,480,000 against the carrying value of all the related production facilities in Jonway Auto for the year ended December 31, 2016.  Both market approach and cost approach were used to determine the fair value of the land and building using Level 2 inputs under the fair value hierarchy because there is an established secondary market. Cost approach was used to determine the fair value of equipment using Level 2 inputs under the fair value hierarchy due to quoted price is available for similar assets.

Four pieces of land were acquired from the acquisition of Jonway auto in 2011. All land in the People’s Republic of China is government owned and cannot be sold to any individual or company. However, the government grants the user a “land use right” (the Right) to use the land. The Company has the right to use the land for 50 years and amortized the Right on a straight-line basis over the period of 50 years. As of December 31, 2016 and 2015, land use rights consist of the following:

	December 31, 2016			December 31, 2015
Land use right	$	9,715		$	10,395
Software		96			102
		9,811			10,497
Less: accumulated amortization		(1570	)		(1,370	)
Less: accumulated translation adjustments		(95	)		(197	)
	$	8,146		$	8,930

As of December 31, 2016, estimated future amortization expense for land use rights is as follows (in thousands): 

	Amortization
Year	Expense
2017	$	182
2018		182
2019		182
2020		182
2021		182
Thereafter		7,236
	$	8,146

Depreciation and amortization expense of property, plant and equipment, as well as land use rights and software was approximately $6.3 and $6.8 million for the years ended December 31, 2016 and 2015, respectively.