FAIR VALUE MEASUREMENT |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENT |
(6)FAIR VALUE MEASUREMENT
The following tables present the placement in the fair value hierarchy of assets that are measured at fair value on a recurring basis at March 31, 2017:
To estimate the fair value of the Notes, the Group used the Cox, Ross and Rubinstein Binomial Model (“Binomial-Model”), which is based on the fair value of the entire invested capital of Brilent evaluated by an income approach. The significant inputs for the valuation model included the following:
The fair value of the underlying asset has been determined using income approach including discounted cash flow model and unobservable inputs including assumptions of projected revenue, expenses, capital spending, other costs and a discount rate of 26% by using the weighted average cost of capital method.
Risk free rate of interest adopted for the valuation were estimated based on the U.S. daily treasury yield as at valuation date with term similar to the expected term of the Notes.
Maturity date is the time to maturity of the Notes according to the investment agreement.
The expected equity volatility were estimated based on the annualized standard deviation of the daily return embedded in the historical stock price of comparable companies with a time horizon close to the expected term determined based on the maturity date.
The following table presents a roll-forward of the fair value of Level 3 (significant unobservable inputs) asset for the year ended March 31, 2017, which only contains available-for-sale investment:
The Group did not have any nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis as of March 31, 2016 and 2017, respectively.
The Group’s financial instruments consist of cash and cash equivalents, accounts receivable, advances to third parties, employees and suppliers, which are included in the prepaid expenses and other current assets, restricted cash, short-term loan and accrued expenses and other payables, all of which have a carrying amount that approximate fair value because of the short maturity of these instruments. |