Property, Plant and Equipment
|6 Months Ended|
Jun. 30, 2015
|Property, Plant and Equipment [Abstract]|
|PROPERTY, PLANT AND EQUIPMENT||
NOTE 10 – PROPERTY, PLANT AND EQUIPMENT
At June 30, 2015 and December 31, 2014, property, plant and equipment consisted of the following:
For the three months ended June 30, 2015 and 2014, depreciation expense amounted to $2,058,120 and $1,940,584, respectively, of which $2,049,565 and $1,933,426, respectively, was included in cost of revenue and inventories, and the remainder was included in general and administrative expense, respectively. For the six months ended June 30, 2015 and 2014, depreciation expense amounted to $3,586,876 and $3,268,713, respectively, of which $3,571,303 and $3,254,355, respectively, was included in cost of revenue and inventories, and the remainder was included in general and administrative expense, respectively.
As of June 30, 2015, 13 aged fishing vessels were being dismantled and will be replaced by 13 new vessels which are under construction. The vessels under construction are not subject to depreciation. Upon completion of the construction, fishing vessel under construction balances will be reclassified to fishing vessels.
At June 30, 2015 and December 31, 2014, the Company had 17 and 43 fishing vessels with net carrying amount of approximately $16.8 million and $20.7 million, respectively, pledged as collateral for its bank loans.
On June 26, 2015, the Company acquired 6 fishing vessels for the appraised fair market value of approximately $56.2 million from Fuzhou Yishun Deep-Sea Fishing Co., Ltd. (“Yishun”) and Fuzhou Honglong Ocean Fishery Co., Ltd. (“Hong Long”), two related parties under common control. Accordingly, the transaction between the Company and these two related parties was accounted as a common control transaction pursuant to ASC 805-50 and it related subsections. Based on Accounting Standards Codification (“ASC”) 805-50, the Company recorded the value of $0 as the cost of the vessels since the 6 vessels had been fully depreciated in Hong Long and Yishun’s books at the date of transfer. The balance of approximately $56.2 million above cost was treated as a return of capital in the equity accounts and was recorded as a reduction in additional paid-in capital.
These vessels are currently licensed and sanctioned by the Chinese Fisheries Management Bureau under the Ministry of Agriculture of China, which allows these vessels to operate and fish in the Western and Central Pacific Ocean of the international waters. These vessels are primarily focused on the catch of tuna and squid. These 6 vessels will be dismantled and replaced by 6 newly-built vessels to continue fishing in the international waters. We expect that the expansions of our fleet will greatly increase our fish harvest volume and revenue.
The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures.
Reference 1: http://www.xbrl.org/2003/role/presentationRef