Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets, Net

Goodwill and Intangible Assets, Net

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

(9)	GOODWILL AND INTANGIBLE ASSETS, NET

(a)

Goodwill

ACG acquire

d 100% equity interests of Huanqiuyimeng and its subsidiaries in the year of 2019. This acquisition was accounted for under the acquisition method of accounting and the excess of fair values of the consideration and

non-controlling

interests over the fair value of the identifiable net assets of Huanqiuyimeng is recorded as goodwill of RMB 200,478,795.

In May

and August 2020, the Group disposed three campuses in relation to the junior art education service to third parties. A decrease in goodwill of RMB

5,723,832

allocated to these campuses within the junior art education service was recognized based on the relative fair values of the campuses being disposed of and the portion of the reporting unit retained.

In July 2022, the Group dispose

d 70

% equity interests of Quanouyimeng in relation to majority of the foreign language training services to a third party, see Note 6 for details

. Nil

goodwill was allocated to the disposal group, of which the fair value is determined a

s nil.

In September 2022, the Group entered into an agreement with Youru. This acquisition was accounted for under the acquisition method and the company recognized a goodwill amounting to RMB

1,534,529

accordingly, see Note 3 for details.

The change in the carrying amount of goodwill by reporting unit is as follows:


	Overseas art study services		Other Educational Services		Consolidate
	RMB		RMB		RMB
Balance as of December 31, 2020 and 2021		176,046,647		18,708,316		194,754,963
Add: Acquisition of Youru		1,534,529		—		1,534,529

Balance as of December 31, 2022		177,581,176		18,708,316		196,289,492

The Company performs goodwill impairment testing on an annual basis and whenever events or changes in circumstances indicate that the carrying value of a reporting unit likely exceeds its fair value. This involves estimating the fair value of the reporting units using discounted cash flow models and the key assumptions used in the valuation models include forecasted revenue growth rates, forecasted operating margins and the discount rate. No impairment was identified and recorded for fiscal years ended December 31, 2020, 2021 and 2022.

(b)

Intangible assets

The following table summarizes the Company’s intangible assets, as of December 31, 2021 and 2022.


	December 31, 2021
	Gross carrying amount		Accumulated amortization /deduction			Impairment		Net carrying amount		Weighted average amortization period
	RMB		RMB			RMB		RMB		Years
Trademark (i)		79,000,000		(19,091,667	)		—		59,908,333		10
Non-compete arrangements (i)		56,000,000		(22,555,555	)		—		33,444,445		6

Total intangible assets		135,000,000		(41,647,222	)		—		93,352,778


	December 31, 2022
	Gross carrying amount		Accumulated amortization /deduction			Impairment		Net carrying amount		Weighted average amortization period
	RMB		RMB			RMB		RMB		Years
Trademark (i)		79,000,000		(26,991,667	)		—		52,008,333		10
Non-compete arrangements (i)		56,000,000		(31,888,889	)		—		24,111,111		6
Copyright obtained		240,000		(240,000	)		—		—		1

Total intangible assets		135,240,000		(59,120,556	)		—		76,119,444

Total amortization expense recognized for the years ended December 31, 2020, 2021 and 2022 is allocated to the following expense items:


	Year ended December 31,
	2020		2021		2022
	RMB		RMB		RMB
Cost of revenues		1,850,377		—		240,000
General and administrative		20,042,857		17,233,333		17,233,333

Total amortization expense		21,893,234		17,233,333		17,473,333

(i)	Trademark and Non-compete arrangements were recorded as a result of the acquisition of Huanqiuyimeng businesses.

As of December 31, 2022, the estimated amortization expense for the next five years is as follows:


	December 31
	RMB
2023		17,233,333
2024		17,233,333
2025		13,344,444
2026		7,900,000
2027		7,900,000