iBio Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Fixed Assets and Capital Lease Obligations

Fixed Assets and Capital Lease Obligations

9 Months Ended

Mar. 31, 2016

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

5.	Fixed Assets and Capital Lease Obligations

Assets held under the terms of capital leases are included in fixed assets and are depreciated on a straight-line basis over the terms of the leases or the economic lives of the assets. Obligations for future lease payments under capital leases are shown within liabilities and are analyzed between amounts falling due within and after one year (see Note 8).

As discussed above, iBio CMO is leasing its facility in Bryan, Texas as well as certain equipment from the Second Affiliate under a 34-year sublease. See Note 8 for more details of the terms of the sublease.

The economic substance of the sublease is that the Company is financing the acquisition of the facility and equipment and accordingly, the facility and equipment are recorded as assets and the lease is recorded as a liability. As the sublease involves real estate and equipment, the Company separated the equipment component and accounted for the facility and equipment as if each was leased separately.

The following table summarizes by category the gross carrying value and accumulated depreciation of fixed assets (in thousands):

	March 31, 2016		June 30, 2015
	(Unaudited)
Facility under capital lease	$	20,000	$	-
Equipment under capital lease		6,000		-
Facility improvements		21		-
Office equipment		44		40
		26,065		40
Accumulated depreciation – assets under capital lease		(259)		-
Accumulated depreciation – other		(31)		(27)
		(290)		(27)
Net fixed assets	$	25,775	$	13

Depreciation expense was approximately $260,000 and $1,100 for the three months ended March 31, 2016 and 2015, respectively, and for the nine months ended March 31, 2016 and 2015, depreciation expense was approximately $263,000 and $3,000, respectively. Depreciation of the assets under the capital lease amounted to approximately $259,000 for both the three and nine months ended March 31, 2016.