NOTE 7 - LAND USE RIGHTS

12 Months Ended

Dec. 31, 2011

Intangible Assets Disclosure [Text Block]

NOTE 7 – LAND USE RIGHTS

On December 29, 2005, the Company lent RMB554,130 ($88,051) to Xigu Village (“Village”), which was interest free and due December 29, 2008. The Village failed to pay the loan as of December 29, 2008. Pursuant to the loan agreement, once the Village was in default, the Company had the right to use the outstanding amount as a prepayment to its future rent obligation for this 49 mu (8.07 acre) parcel of land. The lease requires a yearly payment of RMB10,000 ($1,589) through July, 2053. The Company has no obligation to pay this lease due to the default of Village loan. The balance of Village loan receivable was capitalized at December 31, 2008 as land use rights and amortized over the remaining life of land use rights lease.

On October 31, 2007, the Company lent an additional RMB1,000,000 ($158,900) to the Village. The loan was interest free and due October 31, 2010. Xigu Village failed to repay the loan as of October 31, 2010. Pursuant to the loan agreement, if the Village was unable to repay the loan when due, the Company had the right to offset the defaulted loan balance against future rent obligations of the Company’s newly leased second 49 mu (8.07 acre) parcel of land. The lease requires a yearly payment of RMB10,000 ($1,589) through June 2056. The Company has no obligation to pay this lease due to the default of Village loan. The balance of Village loan receivable was capitalized as land use rights and amortized over the remaining life of land use rights lease started on November 1, 2010.

As of December 31, 2011 and 2010, land use rights were as follows:

	2011			2010
Land use rights	$	246,951		$	235,482
Less: accumulated amortization		(29,806	)		(23,712	)
Land use rights, net	$	217,145		$	211,770

Amortization of land use rights was recorded as rent. Rent expense was $4,808 and $14,934 for 2011 and 2010, respectively.

As of December 31, 2011, the estimated annual amortization of land use rights for the next five years and thereafter is as follows:

2012	$	4,939
2013		4,939
2014		4,939
2015		4,939
2016		4,939
Thereafter		192,450
Total	$	217,145

- Definition

The entire disclosure for all or part of the information related to intangible assets.

+ References+ Details

Asia Carbon Industries, Inc. 10-K