Vision - Alibaba

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Notes to the Financial Statements
2.6 Impairment of non-fi nancial assets
Assets that have an indefi nite useful life are not subject to amortization, but are tested at least annually
for impairment and are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. Assets that are subject to amortization are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value
less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifi able cash fl ows (cash-generating units). Nonfi
nancial assets, other than goodwill, that have suffered impairment are reviewed for possible reversal
of the impairment at each reporting date.
2.7 Other receivables
Other receivables are recognized initially at fair value and subsequently measured at amortized cost
using the effective interest method, less provision for impairment. A provision for impairment of other
receivables is established when there is objective evidence that the Group will not be able to collect
all amounts due according to the original terms of the receivables. Signifi cant fi nancial diffi culties of
the debtor, probability that the debtor will enter into bankruptcy or fi nancial reorganization, and default
or delinquency in payments are considered indicators that the other receivables are impaired. The
amount of the provision is the difference between the other receivables’ carrying amount and the
present value of estimated future cash fl ows, discounted at the original effective interest rate. The
carrying amount of the other receivable is reduced through the use of an allowance account, and
the amount of the loss is recognized in the income statement. When an amount of other receivables
is uncollectible, it is written off against the allowance account for other receivables. Subsequent
recoveries of amounts previously written off are credited to the income statement.
2.8 Deferred costs
Sales commissions paid in respect of service fees received in advance are deferred and are charged
ratably to the income statement over the term of the respective service contracts as the services are
rendered.
2.9 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term
highly liquid investments with original maturities of three months or less.
2.10 Share capital
Ordinary shares are classifi ed as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
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