FAIR VALUE MEASUREMENT

12 Months Ended

Dec. 31, 2022

12.

FAIR VALUE MEASUREMENT

Measured at fair value on a recurring basis

The Company measures financial instruments held, at fair value and long-term available-for-sale securities on a recurring basis.

The fair value of the Company’s financial instruments held, at fair value are determined based on the quoted market price (Level 1). The Company’s derivatives are classified as Level 2 of the fair value hierarchy since inputs to their valuation can be generally corroborated by market data.

The Group measured the fair value of its long-term available-for-sale securities using market approach and discounted cash flow approach and considered those as Level 3 measurement because the Group used unobservable inputs to determine their fair values. As of December 31, 2021 and 2022, recent transaction price was used of market approach and discounted cash flow approach. The unobservable inputs were discounts for lack of marketability for such market approach and discount rates for discounted cash flow approach as of December 31, 2021 and 2022. Significant increases or decreases in any of those inputs in isolation would result in a significant change in fair value measurement.

12.

FAIR VALUE MEASUREMENT (Continued)

Measured at fair value on a recurring basis (Continued)

As of December 31, 2021 and 2022, information about inputs for the fair value measurements of the Group’s assets that were measured at fair value on a recurring basis in periods subsequent to their initial recognition is as follows:


	As of December 31, 2022
	Quoted prices in active markets for identical instruments (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (level 3)		Total balance
	US$		US$		US$		US$
Financial instruments held, at fair value
Funds		2,140,551		—		2,861,868		5,002,419
Bonds		152,699,420		—		—		152,699,420
Stock		4,833,345		—		—		4,833,345
Long‑term available-for-sale securities		—		—		4,516,815		4,516,815
Total		159,673,316		—		7,378,683		167,051,999


	As of December 31, 2021
	Quoted prices in active markets for identical instruments (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (level 3)		Total balance
	US$		US$		US$		US$
Financial instruments held, at fair value
Funds		419,503		—		1,971,872		2,391,375
Stock		1,498,706		—		—		1,498,706
Derivative		—		12,906		—		12,906
Long‑term available-for-sale securities		—		—		5,842,883		5,842,883
Total		1,918,209		12,906		7,814,755		9,745,870

During the years ended December 31, 2021 and 2022, there were no transfers between level 1, level 2 and level 3 categories.

The movements of Level 3 fair value measurements for the years ended December 31, 2021 and 2022 are as follows:


	US$
As of January 1, 2021		3,924,051
Additions during the year		1,000,000
Net unrealized gains		2,871,477
Foreign currency translation adjustment		19,227
As of December 31, 2021		7,814,755
Additions during the year		1,000,000
Net unrealized loss		(967,157	)
Impairment loss		(472,605	)
Foreign currency translation adjustment		3,690
As of December 31, 2022		7,378,683

12.

FAIR VALUE MEASUREMENT (Continued)

Measured at fair value on a recurring basis (Continued)

For the year ended December 31, 2021, the unrealized gains included US$1,899,605 recognized in other comprehensive income (loss) in the consolidated statements of comprehensive income (loss), and US$971,872 recognized in other income in the consolidated statements of comprehensive income (loss). For the year ended December 31, 2022, the unrealized loss included US$857,153 recognized in other comprehensive income (loss) in the consolidated statements of comprehensive income (loss), and the unrealized loss US$110,004 recognized in other income in the consolidated statements of comprehensive income (loss).The Group recognized US$150,978, nil and US$472,605 impairment loss related to the long-term available-for-sale securities as an offset of other income for the years ended December 31, 2020, 2021 and 2022.

Measured at fair value on a non‑recurring basis

The Group measures the equity securities without readily determinable fair value at fair value on a nonrecurring basis whenever there is an impairment indicator or any changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Group recognized US$600,000 and nil impairment loss related to the long-term equity securities without readily determinable fair value in other income for the years ended December 31, 2021 and 2022.

The Group measured the value of its share options and restricted share units granted to employees and management at fair value to determine the share-based compensation expenses on each of the grant date. The fair value was determined using models with significant unobservable inputs (Level 3 inputs). Key inputs and parameters primarily include risk-free interest rate, expected stock price volatility, dividend yields, expected term, and forfeiture rates.

The Group measures goodwill at fair value on a nonrecurring basis and performs a goodwill impairment test annually or more often if event occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carry amount. The Group measured acquired intangible assets using the income approach‑discounted cash flow method when events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. The Group did not recognize any impairment loss related to other intangible assets arising from acquisitions during the years ended December 31, 2021 and 2022. The fair value of goodwill is determined using discounted cash flows, and an impairment loss will be recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. The Group did not recognize any impairment loss related to goodwill during the years ended December 31, 2021 and 2022. Key inputs and parameters primarily for the above impairment assessment include significant judgment and estimates by the management on future earnings, and discount rate.

- 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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