FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2019

29. FAIR VALUE MEASUREMENTS

The Company applies ASC 820. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 requires disclosures to be provided on fair value measurement.

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 — Unobservable inputs which are supported by little or no market activity.

ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

Cash equivalents, time deposits and bonds payable are classified within Level 1 because they are valued by using quoted market prices.

The contingent considerations for the acquired businesses, liability classified RSU and long-term investments are classified within Level 3. The contingent considerations are based on the achievement of certain financial targets in accordance with the sales and purchase agreements for the various periods, as well as other non-financial measures. The fair value of liability classified RSU was estimated using the share price and exchange rate that the Company estimates to be settled in shares.

The Company measures equity investments elected to use the measurement alternative at fair value on a nonrecurring basis, in the cases of an impairment charge is recognized, fair value of an investment is remeasured in an acquisition/a disposal, and an orderly transaction for identical or similar investments of the same issuer was identified.

Assets and liabilities measured at fair value on a recurring basis were summarized below:


	Fair value measurement using:
	Quoted prices in	Significant other
	active markets for	observable	Unobservable
	identical assets	inputs	inputs	Fair value at
	(Level 1)	(Level 2)	(Level 3)	December 31, 2018
	RMB	RMB	RMB	RMB
Cash equivalents:
- Time deposits	1,194,425	—	—	1,194,425
Short-term investments:
- Time deposits	245,014	—	—	245,014
Long-term investments
- Available-for-sale debt securities	—	—	2,537	2,537
Assets	1,439,439	—	2,537	1,441,976

Long-term borrowings:
- Bonds payable	2,030,361	—	—	2,030,361
Other liabilities:
- Liability classified RSU	—	—	4,970	4,970
Liabilities	2,030,361	—	4,970	2,035,331


	Fair value measurement using:
	Quoted prices in	Significant other
	active markets for	observable	Unobservable
	identical assets	inputs	inputs	Fair value at
	(Level 1)	(Level 2)	(Level 3)	December 31, 2019
	RMB	RMB	RMB	RMB	US$
Cash equivalents:
- Time deposits	117,825	—	—	117,825	16,925
Short-term investments:
- Time deposits	363,856	—	—	363,856	52,265
Long-term investments
- Available-for-sale debt securities	—	—	1,713	1,713	246
Assets	481,681	—	1,713	483,394	69,436
Short-term borrowings:
- Current portion of bonds payable	912,416	—	—	912,416	131,060
Long-term borrowings:
- Bonds payable	2,089,114	—	—	2,089,114	300,082
Other liabilities:
- Liability classified RSU	—	—	2,109	2,109	303
Liabilities	3,001,530	—	2,109	3,003,639	431,445

The following table presented a reconciliation of all liabilities measured at fair value on a recurring basis using significant unobservable inputs (level 3):


		Contingent
		consideration
		payable
		RMB
Fair value at January 1, 2018		36,734
Changes in the fair value		(13,905)
Settlement of contingent consideration payable		(22,829)
Transfers in and/or out of Level 3		—
Fair value at December 31, 2018		—
Transfers in and/or out of Level 3		—
Fair value at December 31, 2019		—
Fair value at December 31, 2019 (US$)		—


		Liability classified
		RSU
		RMB
Fair value at January 1, 2018		11,865
Reclassification to equity		(587)
Reversal		(6,308)
Transfers in and/or out of Level 3		—
Fair value at December 31, 2018		4,970
Reclassification to equity		(2,861)
Reversal		—
Transfers in and/or out of Level 3		—
Fair value at December 31, 2019		2,109
Fair value at December 31, 2019 (US$)		303

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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