Property, Plant and Equipment, net

6 Months Ended

Mar. 31, 2014

Property, Plant and Equipment, net [Text Block]

6. Property, Plant and Equipment, net

Property, plant and equipment as of September 30, 2013 and March 31, 2014 consisted of the following:

		September 30, 2013			March 31, 2014
Buildings	$	152,128,751		$	153,178,821
Machinery and equipment		125,617,004			123,860,772
Office equipment		2,520,480			2,925,405
Motor vehicles		1,722,492			1,736,098
		281,988,727			281,701,096
Accumulated depreciation		(123,715,978	)		(127,006,350	)
Construction in progress		11,321,396			18,802,597
Prepayment for acquisition of property, plant and equipment		558,013			3,970,186
Carrying amount	$	170,152,158		$	177,467,529

(i) Depreciation expense is included in the condensed consolidated statements of operations and comprehensive loss as follows:

		Three months ended March 31,				Six months ended March 31,
		2013		2014		2013		2014
Cost of revenues	$	3,452,718	$	1,716,070	$	7,394,524	$	3,290,721
Research and development expenses		143,699		132,043		280,416		247,554
Sales and marketing expenses		34,271		28,061		66,853		56,837
General and administrative expenses		809,783		840,414		1,616,448		1,690,180
	$	4,440,471	$	2,716,588	$	9,358,241	$	5,285,292

(ii)

The Company's Research and Development Test Centre in Shenzhen was completed in July 2013. The Company leased out a substantial part of the Research and Development Test Centre to third party tenants, for a period from three to ten years, and recognized rental income of $1.4 million for the three months ended March 31, 2014 and $2.6 million for the six months ended March 31, 2014. As of September 30, 2013 and March 31, 2014, the Company had also received $715,398 and $1,200,176, respectively in rental deposits from its tenants.

The following schedule provides an analysis of the Company's investment in property on operating leases by major classes as of March 31, 2014:

Buildings	$	44,619,829
Less: Accumulated depreciation		(605,555	)
	$	44,014,274

The following is a schedule by years of minimum future rentals on noncancelable operating leases as of March 31, 2014.

Year ending September 30,
2014	$	2,869,498
2015		5,738,995
2016		5,712,258
2017		5,274,237
2018		4,743,803
Later years		6,270,239
	$	30,609,030

(iii)	Construction in Progress
	Construction in progress as of September 30, 2013 and March 31, 2014 was mainly comprised of capital expenditures for the automation production line of BAK Tianjin and the site of Dalian BAK Power.
	For the three months ended March 31, 2013 and 2014, the Company capitalized interest of $659,803 and $85,420, respectively, to the cost of construction in progress.
	For the six months ended March 31, 2013 and 2014, the Company capitalized interest of $1,369,663 and $318,500, respectively, to the cost of construction in progress.

(iv)

Impairment charge

During the course of the Company's strategic review of its operations, the Company assessed the recoverability of the carrying value of the Company's property, plant and equipment. The impairment charge, if existed, represented the excess of carrying amounts of the Company's property, plant and equipment over the estimated discounted cash flows expected to be generated by the Company's production facilities. The Company charged impairment losses of $11.4 million and $11.4 million for the three and six months ended March 31, 2013, respectively. The impairment charge represented the excess of carrying amounts of the Company's property, plant and equipment over the estimated discounted cash flows expected to be generated by the Company's production facilities in Shenzhen primarily for the production of aluminum-case cells. The Company believes that there was no further impairment for the three and six months ended March 31, 2014.