Note 14 - Goodwill

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Goodwill Disclosure [Text Block]

14. Goodwill

	Amount
	US$(’000)
Balance as of December 31, 2014		6,772
Goodwill impairment losses for the year		(1,071	)
Goodwill allocated to disposal group classified as held for sale		(914	)
Exchange translation adjustment		(391	)
Balance as of December 31, 2015		4,396
Goodwill adjustment due to reclassify disposal group to held and used		914
Exchange translation adjustment		(340	)
Balance as of December 31, 2016		4,970

The Company’s goodwill arose from various business combinations consummated in

2011.

The Company’s goodwill was attributable to its internet advertising and data service reporting unit and brand management and sales channel building reporting unit.

As discussed in Note

2,

the Company exited its brand management and sales channel building business segment, as a result, the Company provided full impairment provision against the remaining carrying value of goodwill attributable to this reporting unit, with a loss of approximately

US$1,117,000

recorded in loss from discontinued operation for the year ended

December

31,

2015.

As of

December

31,

2015,

as discussed in Note

3(l),

based on the relative fair value of liansuo.com, the disposal group classified as held for sale during the period and the portion of the internet advertising and data service reporting unit that would be retained, the Company

first

allocated approximately

US$941,000

carrying value of goodwill attributable to its internet advertising and data service reporting unit to the disposal group. The Company then performed annual impairment test on goodwill remaining in the portion of the reporting unit to be retained using its adjusted carrying amount in accordance with ASC Topic

350

“Intangibles-Goodwill and Others”.

As of

December

31,

2016,

as discussed in Note

3(l),

the disposal group no longer met all criteria for the classification as held for sale, the Company then reclassified the disposal group to held and used. Accordingly, the previously allocated goodwill amount to the disposal group was also reclassified to the goodwill account at its carrying value, as the fair value of the disposal group exceeded its carrying value.

The fair value of reporting units was determined using the income approach by a discounted cash flow analysis. The discounted cash flow method is premised on the concept that the value is based on the present value of all future cash flows by applying an appropriate discount rate. The future benefits generating cash flows consist of current income distributions, appreciation in the asset, or a combination of both. In essence, this valuation method requires a forecast to be made of cash flow, going out far enough into the future until an assumed stabilization occurs for the assets being appraised. This methodology assumes that the forecasted income/cash flow will not necessarily be stable in the near term but will stabilize in the future (See Note

3

(p) for significant unobservable internally-developed inputs used in the fair value measurement).

For the years ended

December

31,

2016

and

2015,

the Company did

no

t record any impairment loss associated with its goodwill.