Prepayments and Other Receivables

6 Months Ended

Mar. 31, 2014

Prepayments and Other Receivables [Text Block]

5. Prepayments and Other Receivables

	Note		September 30, 2013			March 31, 2014
Prepayments for raw materials and others		$	3,466,177		$	1,637,881
Staff advances			701,923			985,344
Prepaid operating expenses			292,049			129,294
Advance to an unrelated third party	(a)		1,169,798			3,204,102
Advance to a related party	(b)		885,052			2,287,903
Consideration receivable	(c)		6,483,507			6,384,215
Net assets of BAK Canada held by trustee	(d)		1,043,833			1,297,937
Value added tax recoverable			4,295,390			3,796,135
Rental receivable from Research and Development Test Centre			37,239			338,125
Others			1,371,790			1,610,349
			19,746,758			21,671,285
Less: Allowance for doubtful accounts			(1,980,914	)		(1,939,655	)
		$	17,765,844		$	19,731,630

(a)	Advances to unrelated third parties were interest-free, unsecured and repayable on demand.
(b)	As of September 30 and March 31, 2014, the Company advanced to Tianjin BAK New Energy Research Institute Co., Ltd (Tianjin New Energy), a related party under the common control of Mr. Xiangqian Li (Mr. Li), the Company's CEO, an amount of $885,052 and $2,287,903 respectively which were interest-free, unsecured and repayable on demand.
(c)	On August 27, 2013, the Company completed the equity transfer of Tianjin Meicai to Tianjin Zhantuo International Trading Co., Ltd. (Tianjin Zhantuo), an unrelated third party. As of September 30, 2013 and March 31, 2014, the remaining consideration receivable was $6,483,507 and $6,384,215 (RMB39.7 million). The amount was interest-free, repayable on September 26, 2013 (30 days upon completion) and pledged for advance from Tianjin Zhantuo (Note 10(e)).
(d)	BAK Canada filed for bankruptcy on March 28, 2013. As of September 30, 2013 and March 31, 2014, its net assets were held under the custody of its trustee.

An analysis of the allowance for doubtful accounts is as follows:

		Six months ended March 31, 2014
Balance at beginning of the period	$	1,980,914
Provision for the period		20,667
Recovery for the period		(31,805	)
Foreign exchange adjustment		(30,121	)
Balance at end of the period	$	1,939,655