Directors' Report - Alibaba

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NOTES TO THE FINANCIAL STATEMENTS For the year ended December 31, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.4 Foreign currency translation (Continued) (c) Group companies (Continued) On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to other comprehensive income. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognized in the consolidated statement of comprehensive income as part of the gain or loss on sale. 2.5 Lease prepayment Lease prepayment represents payments of land use rights to the PRC’s land bureau. Land use right is carried at cost less accumulated amortization and impairment losses. Amortization is provided to write off the cost of lease prepayment on a straight-line basis over the period of the right which is 50 years. 2.6 Property and equipment Property and equipment is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the item. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the consolidated statement of comprehensive income during the year in which they are incurred. Depreciation on property and equipment is calculated using the straight-line method to allocate their costs to their residual value over their estimated useful lives, as follows: Alibaba.com Limited Annual Report 2010 96 Years Buildings 20 – 50 Leasehold and building improvements 2 – 20 (shorter of remaining lease period or estimated useful life) Furniture and office equipment 3 Computer equipment 3 – 5 An asset’s residual value and useful life are reviewed, and adjusted if appropriate, at each balance sheet date. Construction-in-progress represents buildings under construction, which is stated at actual construction cost less any impairment loss. Construction-in-progress is transferred to property and equipment when completed and ready for use. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within other operating income/(expense), net in the consolidated statement of comprehensive income. 2.7 Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiaries, associated companies or jointly controlled entities at the date of acquisition. Goodwill is tested for impairment annually or whenever there is an indication that it may be impaired and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.8 Intangible assets (a) Computer software and technology Computer software and technology primarily comprise computer software that are acquired in business combinations and are recognized at fair value at the acquisition date. Amortization is calculated using the straight-line method over their estimated economic lives of two to ten years. (b) Trademarks and domain names Trademarks and domain names acquired in business combinations are recognized at fair value at the acquisition date. Trademarks and domain names have a finite useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost of trademarks and domain names over their estimated useful lives of ten to fifteen years. (c) Customer relationships Customer relationships acquired in business combinations are recognized at fair value at the acquisition date. The contractual customer relationships have a finite useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method over their estimated life of the customer relationships of three to seven years. 2.9 Available-for-sale investments Available-for-sale investments are non-derivative financial assets that are not classified as loans and receivables, held-tomaturity investments or financial assets at fair value through profit or loss. These investments are initially recognized in the balance sheet at fair value plus transaction costs and measured at each subsequent reporting date at fair value. Changes in fair value are dealt with as movements in the investment revaluation reserve except for impairment losses which are charged to the consolidated statement of comprehensive income. Where these investments are interest-bearing, interest calculated using the effective interest method is recognized in the consolidated statement of comprehensive income. Dividends from available-for-sale investments are recognized when the right to receive payment is established. When available-for-sale investments are sold, the cumulative fair value gains or losses previously recognized in the investment revaluation reserve is recognized in the consolidated statement of comprehensive income. Changes in the fair value of monetary securities denominated in foreign currency and classified as available-for-sale are analyzed between translation differences resulting from changes in the amortized cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortized cost are recognized within finance income, net in the consolidated statement of comprehensive income, and other changes in carrying amount are recognized in other comprehensive income/(expense). Investments in equity instruments that do not have a quoted market price in an active market and whose fair values cannot be reliably measured are measured at cost less provision for impairment in value. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale investments, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that available-for-sale investment previously recognized in the consolidated statement of comprehensive income, is removed from equity and recognized in the consolidated statement of comprehensive income. Impairment losses recognized in the consolidated statement of comprehensive income on equity instruments classified as available-for-sale are not reversed through the consolidated statement of comprehensive income. 97 Alibaba.com Limited Annual Report 2010
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02 Financial and Operational Highli
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FINANCIAL HIGHLIGHTS Total register
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SEPTEMBER AUGUST Organized a big bu
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Award / Recognition Awarding Organi
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LEGAL ADVISERS Freshfields Bruckhau
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In closing, a word about the import
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A WINDOW ON THE GLOBAL MARKET MANAG
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were officially launched in the sec
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At the end of September 2010, we an
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Trust and safety With tens of milli
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Financial performance summary Reven
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Revenue from our international mark
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Product development expenses Our pr
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Profit attributable to equity owner
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In 2010, our capital expenditures d
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OUTLOOK Looking ahead to 2011, we f
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PENG Yi Jie, Sabrina TSAI Chung, Jo
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more than 30 years of global manage
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CULTURE DEVELOPMENT Alibaba.com has
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WE TRULY BELIEVE THAT SOCIAL RESPON
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GROWING A GREENER COMMUNITY
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Composition and attendance Director
Page 47 and 48: Key principle/practice CP/RBP Note
Page 59 and 60: We firmly believe that a sound cont
Page 61 and 62: Upholding Alibaba values is somethi
Page 63 and 64: RESERVES Details of movements in th
Page 65 and 66: Note (continued): (2) These securit
Page 68 and 69: DIRECTORS’ REPORT SHARE-BASED INC
Page 70 and 71: DIRECTORS’ REPORT (ii) Participan
Page 72 and 73: DIRECTORS’ REPORT (b) Particulars
Page 74: DIRECTORS’ REPORT DIRECTORS’ IN
Page 77 and 78: We have also engaged our auditors t
Page 79 and 80: Under the New Cooperation Framework
Page 81 and 82: Unless the parties otherwise agree
Page 83: PURCHASE, SALE OR REDEMPTION OF THE
Page 86 and 87: CONSOLIDATED BALANCE SHEET As of De
Page 88 and 89: BALANCE SHEET As of December 31, 20
Page 90 and 91: CONSOLIDATED STATEMENT OF CHANGES I
Page 92 and 93: CONSOLIDATED CASH FLOw STATEMENT Fo
Page 94 and 95: NOTES TO THE FINANCIAL STATEMENTS F
Page 146: FINANCIAL SUMMARY CONSOLIDATED INCO
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Directors' Report - Alibaba

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