Property and Equipment

12 Months Ended

Dec. 31, 2015

NOTE 4 – PROPERTY AND EQUIPMENT

At December 31, 2015 and 2014, property and equipment consisted of the following:

	Useful life	December 31, 2015			December 31, 2014
Office equipment and furniture	5 years	$	165,403		$	166,734
Manufacturing equipment	5 -10 years		66,381,394			76,870,025
Vehicles	5 years		194,552			205,714
Building and building improvements	5 - 20 years		24,668,268			26,083,624
			91,409,617			103,326,097
Less: accumulated depreciation			(39,655,653	)		(33,697,500	)
		$	51,753,964		$	69,628,597

For the years ended December 31, 2015 and 2014, depreciation expense amounted to $8,128,805 and $8,469,771, respectively, of which $7,299,775 and $7,244,647, respectively, was included in cost of revenues. In 2014, $503,675 of the depreciation expense related to the ESR equipment, which was held for operating lease in 2014, was included as a reduction in rental income, and the remainder was included in operating expenses. In 2015 the equipment was treated as equipment held for sale, and no depreciation expense was taken with respect to that equipment.

At December 31, 2015 and 2014, the Company conducted an impairment assessment on property and equipment based on the guidelines established in ASC Topic 360 to determine the estimated fair market value of property and equipment as of December 31, 2015 and 2014. Such analysis considered future use of such equipment, consultation with equipment resellers, and other industry factors. Upon completion of the 2015 impairment analysis, the Company determined that the carrying value exceeded the fair market value on certain equipment used in the Company’s petroleum and chemical equipment segment and forged rolled rings and related components segment. Accordingly, in connection with the impairment of such equipment, the Company recorded an impairment charge of $6,599,487 at December 31, 2015. The Company did not record any impairment charge on the property and equipment for the year ended December 31, 2014.