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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2018
Fair Value Disclosures [Abstract] |
Fair Value Measurements |
6. | FAIR VALUE MEASUREMENTS
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 observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
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. Assets and Liabilities Measured or Disclosed at Fair Value In accordance with ASC 820, the Company measures equity investments with readily determinable fair value, other invested securities and investments accounted for at fair value on a recurring basis. The fair value of time deposits are determined based on the prevailing interest rates in the market. The fair values of the Company’s held-to-maturity investments as disclosed are determined based on the discounted cash flow model using the discount curve of market interest rates. The fair value of the Company’s available-for-sale debt investments and other invested securities are measured using the income approach, based on quoted market interest rates of similar instruments and other significant inputs derived from or corroborated by observable market data. The fair values of the Company’s equity investments in the equity securities of publicly listed companies are measured using quoted market prices. Investments accounted for at fair value are equity investments in unlisted companies held by consolidated investment companies, which do not have readily determinable market values. The fair value of these investments were categorized as Level 3 in the fair value hierarchy. The Company uses a combination of valuation methodologies, including market and income approaches based on the Company’s best estimate, which is determined by using information including but not limited to the pricing of recent rounds of financing, future cash flow forecasts, liquidity factors and multiples of a selection of comparable companies. The Company measures certain debt and equity investments at fair value on a nonrecurring basis if an impairment charge is recognized. For equity investments without readily fair value for which the Company elected to use the measurement alternative, the equity investment is measured at fair value on a nonrecurring basis when there is an orderly transaction for identical or similar investments of the same issuer. The fair value of these investments were categorized as Level 3 in the fair value hierarchy. The Company’s non-financial assets, such as intangible assets, goodwill and fixed assets, would be measured at fair value only if they were determined to be impaired on other-than-temporary basis. Assets and liabilities measured at fair value on a recurring basis or disclosed at fair value are summarized below:
|  |  |  |  | Fair value measurement or disclosure at December 31, 2017 |
|  | Total fair value at December 31, 2017 |  |  | Quoted prices in active markets for identical assets (Level 1) |  |  | Significant other observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
| RMB |  |  | RMB |  |  | RMB |  |  | RMB |
| (In millions) |
Fair value disclosure |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Time deposits |  |  | 130 |  |  |  |  |  |  |  | 130 |  |  |  |  |
Money market funds |  |  | 2,384 |  |  |  | 2,384 |  |  |  |  |  |  |  |  |
Short-term investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Held-to-maturity debt investments |  |  | 48,695 |  |  |  |  |  |  |  | 48,695 |  |  |  |  |
Long-term notes payable |  |  | 35,943 |  |  |  |  |  |  |  | 35,943 |  |  |  |  |
Fair value measurement |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short-term investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-sale debt investments |  |  | 40,715 |  |  |  |  |  |  |  | 40,715 |  |  |  |  |
Other invested securities |  |  | 18,350 |  |  |  |  |  |  |  | 18,350 |  |  |  |  |
Long-term investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-sale equity investments |  |  | 2,773 |  |  |  | 2,773 |  |  |  |  |  |  |  |  |
Investments accounted for at fair value |  |  | 321 |  |  |  |  |  |  |  |  |  |  |  | 321 |
Other non-current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative instruments |  |  | 168 |  |  |  |  |  |  |  | 168 |  |  |  |  |
Total assets measured at fair value |  |  | 62,327 |  |  |  | 2,773 |  |  |  | 59,233 |  |  |  | 321 |
|  |  |  |  |  |  |  | Fair value measurement or disclosure at September 30, 2018 |
|  | Total fair value at September 30, 2018 |  |  | Quoted prices in active markets for identical assets (Level 1) |  |  | Significant other observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
|  | (RMB) |  |  | (US$) |  |  | (RMB) |  |  | (RMB) |  |  | (RMB) |
|  | (In millions) |
Fair value disclosure |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Time deposits |  |  | 1,498 |  |  |  | 218 |  |  |  |  |  |  |  | 1,498 |  |  |  |  |
Money market fund |  |  | 2,672 |  |  |  | 389 |  |  |  | 2,672 |  |  |  |  |  |  |  |  |
Short-term investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Held-to-maturity debt investments |  |  | 32,105 |  |  |  | 4,675 |  |  |  |  |  |  |  | 32,105 |  |  |  |  |
Long-term notes payable |  |  | 40,328 |  |  |  | 5,872 |  |  |  |  |  |  |  | 40,328 |  |  |  |  |
Fair value measurement |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short-term investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-sale debt investments |  |  | 50,161 |  |  |  | 7,304 |  |  |  |  |  |  |  | 50,161 |  |  |  |  |
Long-term investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity investments at fair value with readily determinable fair value |  |  | 5,003 |  |  |  | 728 |  |  |  | 5,003 |  |  |  |  |  |  |  |  |
Investment accounted for at fair value |  |  | 1,279 |  |  |  | 186 |  |  |  |  |  |  |  |  |  |  |  | 1,279 |
Other non-current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative instruments |  |  | 296 |  |  |  | 43 |  |  |  |  |  |  |  | 277 |  |  |  | 19 |
Accounts payable and accrued liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative instruments |  |  | 123 |  |  |  | 18 |  |  |  |  |  |  |  |  |  |  |  | 123 |
Amounts due to related parties, non-current |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial liability |  |  | 347 |  |  |  | 51 |  |  |  |  |  |  |  | 347 |  |  |  |  |
Net assets measured at fair value |  |  | 56,269 |  |  |  | 8,192 |  |  |  | 5,003 |  |  |  | 50,091 |  |  |  | 1,175 |
Assets measured at fair value on a non-recurring basis The company measures non-financial assets such as long-term investments on a nonrecurring basis when impairment charges are recognized. These nonrecurring fair value measurements use significant unobservable inputs (Level 3). RMB197 million and RMB298 million (US$45 million) of long-term investments impairment charges were recognized for the three-month periods ended September 30, 2017 and 2018. RMB197 million and RMB396 million (US$58 million) of long-term investments impairment charges were recognized for the nine-month periods ended September 30, 2017 and 2018. The remeasurement was due to declining financial performances and changes in the business circumstances of these investees. The corresponding impairment charges incurred were recorded accordingly. The Company uses a combination of valuation methodologies, including market and income approaches based on the Company’s best estimate to determine the fair value of these investments. For investments in private companies, information considered by the Company include but are not limited to the pricing of recent rounds of financing, future cash flow forecasts, and liquidity factors. For investments in listed companies, the Company mainly considered the quoted share price.

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- 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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