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Equipment Held for Operating Lease/Held for Sale
12 Months Ended
Dec. 31, 2014
Equipment Held For Operating Lease [Abstract]  
EQUIPMENT HELD FOR OPERATING LEASE

NOTE 6 – EQUIPMENT HELD FOR OPERATING LEASE/HELD FOR SALE

 

The Company measures long-lived assets to be leased at the lower of carrying amount or fair value, less associated costs to lease these assets. During the last quarter of 2013, the Company decided to lease the ESR equipment to a third party and negotiations took place last quarter of 2013 through March 2014.  In March 2014, the Company entered into an operating lease agreement with an eight-year term commencing April 1, 2014, with a third party, whereby the lessee leases the ESR equipment from the Company for quarterly lease payments of 1,450,000 RMB (including value-added tax, approximately $236,000 per quarter).  Accordingly, at December 31, 2013, the ESR equipment has been reflected as equipment held for operating lease on the accompanying consolidated balance sheets. The lessee stopped using the equipment and stopped paying rent in early 2015. Therefore, the Company reclassified the equipment held for operating lease to equipment held for sale at December 31, 2014. At December 31, 2014 and 2013, the Company evaluated the ESR equipment for impairment. The Company compared the estimated fair values of the equipment to its carrying value with impairment indicators and recorded an impairment charge for the excess of carrying value over fair value. For the years ended December 31, 2014 and 2013, the Company recorded an impairment loss on ESR equipment in the amount of $3,799,947 and $2,573,256, respectively.

 

Equipment held for operating lease was depreciated over its estimated useful life starting from the operating lease commencement date, April 1, 2014 through December 31, 2014.  Rental payments were recorded as rental income over the lease term as earned. The related depreciation on the equipment held for operating lease was recognized as a reduction of rental income on a straight-line basis. For the year ended December 31, 2014, the Company recorded rental income of $605,214 and recorded related depreciation on the equipment held for operating lease of $503,675, respectively, which were included in rental income, net, on the accompanying consolidated statements of income and comprehensive income.