Summary of Significant Accounting Policies, Continued. On November 23, 2010, the court released the restriction on the 95% equity interests in Quan Toodou and issued another Asset Conservatory Notification to restrict the transfer, disposal or payment of dividend on the 38% equity interests in Quan Toodou ("Frozen Equity"), which represents the plaintiff's claim of her portion of the community assets. The court did not specify the period of the conservatory measures and normally, it should be no longer than 2 years according to PRC judicial practice. Subsequently, the Company has evaluated the potential impact of the lawsuit on the contractual arrangements it has currently in place with Xxxx Xxxxxx based on the advice of its PRC legal counsel. Based on the advice from the Company's PRC legal counsel, the restrictions imposed under the conservatory measures did not impact the validity and performance of any of the agreements entered into between Reshuffle Shanghai and Xx. Xxxx as the nominee shareholder of Xxxx Xxxxxx and between Reshuffle Shanghai and Xxxx Xxxxxx. Consequently, prior to the litigation and issuance of the Asset Conservatory Notification, it did not impact the Company's previous accounting conclusion on the consolidation of Xxxx Xxxxxx. Based on the advice of the Company's PRC legal counsel, upon the issuance of the conservatory measures as set out in the Asset Conservatory Notification, the Company concluded that all of these agreements discussed in Note 1 are still valid. While the overall performance of these agreements is still intact, certain restrictions have been imposed as a result of the conservatory measures on the following agreements: • Proxy Agreement—The conservatory measures prohibited the use of voting rights to transfer, dispose or distribute dividend on the Frozen Equity. However, Reshuffle Shanghai could continue to exercise full voting rights on all other matters, including making all the operational and financial decisions. • Option Agreement—the exercise of the option agreement was not allowed under the conservatory measure, however, the exercise under this agreement is subject to restrictions under the current PRC laws regardless of the conservatory measures. Given the PRC laws and regulations prohibit or restrict foreign ownership of companies that provide advertising services and hold ICP license and the License for Transmission of Audio-Visual Programs through the Internet at present, the Company is not allowed to exercise the option to acquire the equity interest in Qu...
Summary of Significant Accounting Policies, Continued. Financial assets and liabilities measured and recognized at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy as described above was as follows: As of December 31, 2010 Level 1 Level 2 Level 3 Total Financial assets Cash in bank 97,275,297 — — 97,275,297 Restricted cash 66,227,000 — — 66,227,000 Bank deposit with the maturity term below 3 months 165,875,478 — — 165,875,478 Bank deposit with the maturity term greater than 3 months but less than 1 year 5,837,246 — — 5,837,246 Total 335,215,021 — — 335,215,021 Financial liabilities Warrants to purchase Series E Preferred Shares (Note 10) 154,039,611 154,039,611 As of December 31, 2011 Level 1 Level 2 Level 3 Total Financial assets Cash in bank 872,000,453 — — 872,000,453 Restricted cash 96,786,719 — — 96,786,719 Total 968,787,172 — — 968,787,172 In accordance with the provisions of the Impairment or Disposal of Long-Lived Assets Subsections of ASC 000-00-00, long-lived assets held and used were written down to their fair value whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. The determination of fair value of the long-lived assets acquired involves significant judgments and estimates, including, but are not limited to, comparable market transactions, quotes, future cash flows, business plans, technological improvements or obsolesces, and operating results. Impairment charges of RMB 2,372,289, zero and zero related to computer hardware and other equipment was recognized for the years ended December 31, 2009, 2010 and 2011 (Note 4). Financial assets and liabilities measured and recognized at fair value on a non-recurring basis and classified under the appropriate level of the fair value hierarchy as described above was as follows: Fair Value Measurement Using Carrying Amount As of December 31, 2009 Level 1 Level 2 Level 3 Total Loss Computer hardware and other equipment 72,425,312 — — 70,053,023 (2,372,289 ) F-19 TUDOU HOLDINGS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Amounts expressed in RMB unless otherwise stated)
Summary of Significant Accounting Policies, Continued. Following is reconciliation of the beginning and ending balances of warrants measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2010 and 2011: Amount (RMB) Amount (RMB) Balance as on January 1, 2010 — Issuance of warrants 29,359,551 Changes in fair value of warrants recorded in income statement 124,680,060 Balance as on December 31, 2010 154,039,611 Balance as on January 1, 2011 154,039,611 Changes in fair value of warrants recorded in income statement 113,732,565 Exercise of warrants Proceeds from the exercise of warrants 160,423,540 — Cash conversion of Series E preferred shares (resulting from the exercise of warrants) to Class B Ordinary Shares (160,423,540 ) — Cashless conversion of Series E preferred shares (resulting from the exercise of warrant) to Class B Ordinary Shares — (267,772,176 ) Balance as on December 31, 2011 — In determining the fair value of the warrants, the Company applied the Black-Scholes option pricing model. The assumptions used in the Black-Scholes option pricing model are disclosed in Note 12.
Summary of Significant Accounting Policies, Continued. Mobile video services The Group currently also generates revenue from mobile video services through the partnership agreement with the third party mobile network operator. The Group provides video clips to the mobile network operator for its mobile phone users. Users pay a monthly subscription fee to the mobile network operator for access to the video channel or pay on a per-clip download basis, and the Company shares the fees collected by the mobile network operator for such services. Mobile video service revenue is recognized in the month in which the service is performed based on the information obtained from a platform operated by the mobile network operator and the monthly reports from the mobile network operator. Differences noted, if any, between the information received from the platform and the monthly report are adjusted at each month end. There has been no significant difference noted during the years presented. The revenues recognized under the arrangement represent only the Group's shares of the revenues to be received from the mobile network operator, i.e. recorded on a net basis. The Group is not the primary obligor in the arrangement, nor does it enter into contract with end customers or has the price setting capabilities, rather the Group provides the content to the mobile network operator in accordance with the operator's overall strategy and requirements. Sub-licensing revenues The Group also generates revenues from the sub-licensing agreements for some content licensed from third party vendors. The exclusive licensing agreements the Group entered into with the vendors has a definitive license period and including the rights to sublicense these content to other third parties. The Group enters into a non-exclusive sub-license agreement with the sub-licensee for a period that falls within the original exclusive license period. The Company receives a fixed amount of the sub-license fee upfront under the sub-licensing arrangements and does not have any future obligation once it has provided the underlying tape/disk to the sub-licensee (which is provided at or before the beginning of the sub-license period). In accordance with ASC 926-605, Entertainment-Films, Revenue Recognition, the Group recognizes the amount of the sub-license fee as revenue at the beginning of the sub-license period only when the Company meets all the following criteria: persuasive evidence of a sub-licensing arrangement with a customer exists, the content has been deliv...
Summary of Significant Accounting Policies, Continued. During the course of operations the Gas Departments have activity between funds for various purposes. Any residual balances outstanding at year end are reported as due from/to other funds and advances to/from other funds. While these balances are reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Balances between the funds included in business-type activities (i.e., the enterprise funds) are eliminated so that only the net amount is included as internal balances in the business-type activities column. Further, certain activity may occur during the year involving transfers of resources between funds. In fund financial statements these amounts are reported at gross amounts as transfers in/out. While reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Transfers between the funds included in business-type activities are eliminated so that only the net amount is included as internal balances in the business-type activities column.
Summary of Significant Accounting Policies, Continued statements of the China High, WGC, Shangdong Borun and Daqing Borun. All significant inter-company transactions and balances have been eliminated upon consolidation. The unaudited interim consolidated financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of the financial position as of September 30, 2009 and the statements of operations for the nine month periods ended September 30, 2008 and 2009, as well as the statements of cash flows for the nine months ended September 30, 2008 and 2009. Certain information and disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted. These unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2008. The Company believes that these financial statements contain all adjustments necessary so that they are not misleading. The results of operations for interim periods are not necessarily indicative of the results of operations that could be expected for the full year.
Summary of Significant Accounting Policies, Continued. Amortization Debt issuance costs are recorded at cost and amortized over the life of the loan, which is 3 years. Amortization expense for the quarter ended September 30, 2008 was $16,667. Advertising Advertising costs are generally charged to expense in the year incurred. Advertising expense for the quarter ended September 30, 2008 was $165. Income Taxes Income taxes are provided for tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are recognized for differences between the bases of assets and liabilities for financial statement and income tax purposes. The differences relate primarily to the use of different depreciation methods, the use of different treatments for debt issuance costs, an NOL carryforward and the differing treatment of the Company’s start-up and organizational costs.
Summary of Significant Accounting Policies, Continued. Discount rates using a risk-free rate that reflects the time value of money are used to calculate the net present value. The related liability is adjusted for each period for the unwinding of the discount rate and for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation. As at August 31, 2014 and 2013 the Company does not have any decommissioning obligations.
Summary of Significant Accounting Policies, Continued. Inventory Inventory is stated at the lower of cost or net realizable value, accounted for using the weighted average cost method. The inventory balances at December 31, 2019 and 2018 consisted of finished goods held for distribution. The cost elements in inventory consist of purchase of products, transportation, and warehousing. Inventory valuation is impacted by excess or inventory near expiration based on management’s estimates for excess or inventory near expiration based on management’s estimates of forecast turnover of inventories on hand and under contract. A significant change in the timing or level of demand for certain products as compared to forecast amounts may result in recording expense for excess or expired inventory in the future. The costs for excess inventory are included in cost of goods sold and have historically been adequate to provide for losses on inventory. We manage inventory levels and purchase commitments in an effort to maximize utilization of inventory on hand and under commitments.
Summary of Significant Accounting Policies, Continued. Revenue Recognition We recognize revenue under ASC 606, Revenue from Contracts with Customers (Topic 606). This guidance sets forth a five-step model which depicts the recognition of revenue in an amount that reflects what we expect to receive in exchange for the transfer of goods or services to customers. We recognize revenue when our performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control of our products is transferred upon delivery to the customer. Revenue is measured as the amount of consideration that we expect to receive in exchange for transferring goods and is presented net of provisions for customer returns and allowances. The amount of consideration we receive and revenue we recognize varies with changes in customer incentives we offer to our customers and their customers. Sales taxes and other similar taxes are excluded from revenue. Distribution expenses to transport our products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.
