v3.4.0.3
FAIR VALUE OF ASSETS AND LIABILITIES
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12 Months Ended |
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FAIR VALUE OF ASSETS AND LIABILITIES [Abstract] |
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FAIR VALUE OF ASSETS AND LIABILITIES |
4. |
FAIR VALUE OF ASSETS AND LIABILITIES |
For a description of the fair value hierarchy and the Company's fair value methodologies, see “Note 2 – Summary of Significant Accounting Policies.” The Company did not transfer any assets or liabilities in or out of level 3 during the years ended December 31, 2013, 2014, and 2015.
Financial Instruments Recorded at Fair Value
The following tables present the fair value hierarchy for assets and liabilities measured at fair value:
December 31, 2015 |
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Level 1 Inputs |
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Level 2 Inputs |
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Level 3 Inputs |
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Balance at Fair Value |
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Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
130,641 |
|
|
|
- |
|
|
|
- |
|
|
|
130,641 |
|
Loans at fair value |
|
|
- |
|
|
|
- |
|
|
|
34,164 |
|
|
|
34,164 |
|
Total Assets |
|
|
130,641 |
|
|
|
- |
|
|
|
34,164 |
|
|
|
164,805 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable to the Fund at fair value |
|
|
- |
|
|
|
- |
|
|
|
39,049 |
|
|
|
39,049 |
|
Total Liabilities |
|
|
- |
|
|
|
- |
|
|
|
39,049 |
|
|
|
39,049 |
|
December 31, 2014 |
|
Level 1 Inputs |
|
|
Level 2 Inputs |
|
|
Level 3 Inputs |
|
|
Balance at Fair Value |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
222 |
|
|
|
- |
|
|
|
- |
|
|
|
222 |
|
Total Assets |
|
|
222 |
|
|
|
- |
|
|
|
- |
|
|
|
222 |
|
As the Company's loans and related payable to the Fund do not trade in an active market with readily observable prices, the Company uses significant unobservable inputs to measure the fair value of these assets and liabilities. Financial instruments are categorized in the Level 3 valuation hierarchy based on the significance of unobservable factors in the overall fair value measurement. At December 31, 2015, the discounted cash flow methodology is used to estimate the fair value of loans. As of December 31, 2015, due to the adoption of ASU 2014-13 (see Note 2), the payable to the Fund of the consolidated trust were measured on the basis of the fair value of the loans of the consolidated trust as the loans were determined to be more observable.
As of December 31, 2015, the significant unobservable inputs used in the fair value measurement of the loans of the consolidated trust include the discount rate applied in the valuation models, default and recovery rates applied in the valuation models, and early prepayment rates. These inputs in isolation can cause significant increases or decreases in fair value. Specifically, when a discounted cash flow model is used to determine fair value, the significant input used in the valuation model is the discount rate applied to present value the projected cash flows. Increases in the discount rate can significantly lower the fair value of loans; conversely a decrease in the discount rate can significantly increase the fair value of loans. The discount rate is determined based on the market rates.
Significant Unobservable Inputs
Financial Instrument |
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Unobservable Input |
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December 31, 2015 |
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Range of Inputs |
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Weighted- Average |
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Loans and payable to the Fund |
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Discount rates |
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12.0 |
% |
|
|
Net cumulative expected loss rates (1) |
|
|
7.9 |
% |
|
|
Cumulative prepayment rates (2) |
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|
7.4 |
% |
(1) Expressed as a percentage of the loan volume.
(2) Expressed as a percentage of remaining principle of loans.
The following table presents additional information about Level 3 loans, payable to the Fund measured at fair value on a recurring basis for the years ended December 31, 2015 and 2014.
|
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Loans |
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Payable to fund |
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Balance at December 31, 2014 |
|
|
- |
|
|
|
- |
|
Purchases of loans |
|
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39,383 |
|
|
|
- |
|
Initial contribution |
|
|
- |
|
|
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39,792 |
|
Principal payments |
|
|
(1,659 |
) |
|
|
- |
|
Interest and penalties received |
|
|
- |
|
|
|
719 |
|
Deductibles expenses associated with Trust operating |
|
|
- |
|
|
|
(114 |
) |
Change in fair value of loans |
|
|
(2,505 |
) |
|
|
(142 |
) |
Exchange difference |
|
|
(1,055 |
) |
|
|
(1,206 |
) |
Balance at December 31, 2015 |
|
|
34,164 |
|
|
|
39,049 |
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Financial Instruments Not Recorded at Fair Value
Financial instruments, including restricted cash, accounts receivable, accounts payable, short-term investments and amounts due from/to related parties are not recorded at fair value. The carrying values of restricted cash, accounts receivable, accounts payable, short-term investments and amounts due from/to related parties are approximate their fair value reported in the consolidated balance sheets due to the short term nature of these assets and liabilities.
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- DefinitionThe entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.
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