| DECONSOLIDATION OF A SUBSIDIARY |
5. DECONSOLIDATION OF A SUBSIDIARY
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On December 31, 2010, Huayi acquired 51% of Huayi Juren
Information’s shares. The Group and another shareholder own the remaining 34% and 15% interest,
respectively. In exchange for the 51% interest, Huayi agreed to pay the Group a total
consideration of RMB57,250,000 (US$8,674,242). RMB 28,625,000 was paid to the Group as of
December 31, 2010. |
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As a result of the deconsolidation, the Group’s investment in Huayi Juren Information increased
by RMB 21,250,000, representing the Group’s net investment on December 31, 2010 immediately
before the transaction. The following adjustments were made to the consolidated
balance sheet to reflect the deconsolidation of Huayi Juren Information on December 31, 2010: |
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in RMB |
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Intangible assets (Note 8)
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(25,000,000 |
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Due from related parties (Note 21)
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25,000,000 |
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Cash and cash equivalents
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(25,000,000 |
) |
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Non-controlling interests (Note 15)
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3,750,000 |
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(21,250,000 |
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The Group had a receivable due from Huayi Juren Information amounting to RMB 25,000,000
(US$3,787,879). Effective December 31, 2010, as a result of the disposal, Huayi Juren
Information is no longer consolidated, accordingly, the receivable is no longer eliminated in
consolidation and is presented as “Due from related parties” (see Note 21) in the consolidated
balance sheet. |
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As a result of the disposition to Huayi, the Group reduced its investment in Huayi Juren
Information by RMB 12,750,000 for the 51% interest sold, resulting in a remaining investment
balance of RMB 8,500,000 for its 34% retained interest. The Group recognized a gain on the
disposition amounting to RMB 44,500,000 (US6,742,424), representing the difference between the
proceeds received of RMB 57,250,000 (US$8,674,242), and the pro rata portion of the investment
sold of RMB 12,750,000. The Group also recognized a gain of RMB 24,274,051 (US$3,677,886),
representing the difference between the fair value of the equity investment retained amounting
to RMB 32,774,051 (US$4,965,765), and the pro rata portion of the investment retained of RMB
8,500,000 (US$1,287,879) The fair value of the retained equity interest was derived from the
sale price of the Group’s 51% interest to Huayi adjusted for a discount for lack of control. The
total gain on the deconsolidation of Huayi Juren Information amounting to RMB 68,774,051
(US$10,420,311) is included in “Other (expense) income, net” in the accompanying consolidated
statement of operations and comprehensive income. |
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