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FAIR VALUE

12 Months Ended

Feb. 28, 2022

15. FAIR VALUE

(a) Assets and liabilities measured at fair value on a recurring basis

In accordance with ASC 820-10, the Group measures financial products, available-for-sale investments, fair value option investment and equity securities with readily determinable fair value at fair value on a recurring basis. Equity securities classified within Level 1 are valued using quoted market prices currently available on the Hong Kong Stock Exchange. Variable-rate financial instruments and available-for-sale investments classified within Level 2 are valued using directly or indirectly observable inputs in the market place. The available-for-sale investments and fair value option investment classified within Level 3 are valued using income approach in discounted cash flow method or market approach in backsolve method. The discounted cash flow analysis and backsolve method require the use of significant unobservable inputs (Level 3 inputs) which involve significant management judgment and estimation. In the valuation of Level 3 financial instruments as of February 28, 2022, the weighted average cost of capital adopted ranges from 19% to 24% with weighted average at 20%, the discount for lack of marketability adopted ranges from 11% to 30% with weighted average at 17%, and the expected volatilities adopted ranges from 40% to 64% with weighted average at 56%.

As of February 28, 2021 and 2022, information about inputs for the fair value measurements of the Group’s assets that are measured at fair value on a recurring basis in periods subsequent to their initial recognition is as follows:


	Fair Value Measurement at Reporting Date Using
			Quoted Prices in		Significant Other		Significant
	February 28,		Active Market for		Observable		Unobservable
Description	2021		Identical Assets		Inputs		Inputs
			(Level 1)		(Level 2)		(Level 3)

Short-term investments
Variable-rate financial instruments	$	457,723		—	$	457,723		—
Available-for-sale investments	$	308,970		—	$	308,970		—
Long-term investments
Equity securities with readily determinable fair values	$	23,467	$	23,467		—		—
Fair value option investment	$	7,661		—		—	$	7,661
Available-for-sale investments	$	361,788		—		—	$	361,788

Total	$	1,159,609	$	23,467	$	766,693	$	369,449

15. FAIR VALUE - continued

(a) Assets and liabilities measured at fair value on a recurring basis-continued


	Fair Value Measurement at Reporting Date Using
			Quoted Prices in		Significant Other		Significant
	February 28,		Active Market for		Observable		Unobservable
Description	2022		Identical Assets		Inputs		Inputs
			(Level 1)		(Level 2)		(Level 3)

Short-term investments
Variable-rate financial instruments	$	150,000		—	$	150,000		—
Available-for-sale investments	$	340,183		—	$	340,183		—
Long-term investments
Equity securities with readily determinable fair values	$	16,723	$	14,606	$	2,117		—
Fair value option investment	$	17,735		—	$	17,419	$	316
Available-for-sale investments	$	134,033		—		—	$	134,033

Total	$	658,674	$	14,606	$	509,719	$	134,349

The roll forward of Level 3 investments are as following:


	US$

Balance as of February 29, 2020	$	310,842
Purchase		20,349
Transfer in due to reclassification		22,579
Changes in fair value		19,145
Impairment loss		(10,029)
Foreign exchange difference		6,563

Balance as of February 28, 2021	$	369,449
Purchase		13,616
Disposal		(2,219)
Changes in fair value		(41,698)
Impairment loss		(204,807)
Foreign exchange difference		8

Balance as of February 28, 2022	$	134,349

(b) Assets and liabilities measured at fair value on a nonrecurring basis

The Group’s goodwill and intangible assets are primarily acquired through business acquisitions. Purchase price allocation are measured at fair value on a nonrecurring basis as of the acquisition dates. The Group measures its goodwill and intangible assets at fair value on a nonrecurring basis annually or whenever events or changes in circumstances indicate that carrying amount of a reporting unit exceeds its fair value. Acquired intangible assets are measured 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.

15. FAIR VALUE - continued

(b) Assets and liabilities measured at fair value on a nonrecurring basis - continued

The Group measures long-term investments (excluding the equity securities with readily determinable fair values, available-for-sale investments and fair value option investment) at fair value on a nonrecurring basis only if an impairment or observable price adjustment is recognized in the current period. Please see Note 10(2), Note 10(3) and Note 10(4).

For equity securities without readily determinable fair values, the fair value was determined using directly or indirectly observable inputs in the market place (Level 2 inputs). Whenever events or changes in circumstances indicate that the carrying value may no longer be recoverable, the fair value of aforementioned long term investments was determined using models with significant unobservable inputs (Level 3 inputs), primarily the management projection of discounted future cash flow and the 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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