Fixed assets refer to buildings, structures, machines, motor vehicles and other equipment related to the company's production and operation with a service life of more than one year. Fixed assets also include other non-productive equipment with a single value of more than 2,000 yuan and a service life of more than 2 years. Fixed assets are initially recorded at cost at the time of purchase.

Subsequent expenditures of fixed assets are included in the book value of assets only when the economic benefits related to the assets are likely to flow into the Company and the amount exceeds the original expectation, such as prolonging the service life of fixed assets, significantly improving product quality or significantly reducing product cost.

However, the increased book value of fixed assets shall not exceed its recoverable net amount. In addition to the above, the subsequent expenditures of fixed assets are recognized as expenses when incurred.