| Significant Accounting Policies (Policies) | 9 Months Ended |
| Sep. 30, 2018 |
| Accounting Policies [Abstract] | |
| Basis of Consolidation | Basis of Consolidation
The unaudited interim condensed consolidated financial statements
include the accounts of Baidu, Inc. (“Baidu” or the
“Company”), its subsidiaries, variable interest
entities (“VIEs”) and the subsidiaries of the VIEs. The
Company, its subsidiaries, VIEs and subsidiaries of the VIEs are
hereinafter collectively referred to as the
“Group.”
As of September 30, 2018, the Company has subsidiaries
incorporated in countries and jurisdictions including the
People’s Republic of China (“PRC”), Hong Kong,
Japan, Cayman Islands and British Virgin Islands
(“BVI”).
As of September 30, 2018, the Company also effectively
controls a number of VIEs through a series of contractual
agreements. The significant VIEs of the Group include:
•
Beijing Baidu Netcom Science Technology Co., Ltd.
(“Baidu Netcom”), controlled by the Company and Baidu
Online Network Technology (Beijing) Co., Ltd. (“Baidu
Online”), one of the Company’s wholly-owned
subsidiaries;
•
Beijing Perusal Technology Co., Ltd. (“Beijing
Perusal”), controlled by Baidu Online; and
•
Other VIEs controlled by the Company’s
subsidiaries other than Baidu Online.
The Group offers online marketing services, operates AI-powered new
business initiatives, operates an online video platform offering
advertising business and offers membership services of its content
library. The Group’s principal geographic market is in the
PRC. The Company does not conduct any substantive operations on its
own, but conducts its primary business operations through its
subsidiaries and VIEs in the PRC.
PRC laws and regulations prohibit or restrict foreign ownership of
internet content, advertising, audio and video services, and mobile
application distribution businesses. To comply with these foreign
ownership restrictions, the Group operates its websites and
primarily provides services subject to such restriction in the PRC
through the VIEs, the PRC legal entities that were established or
whose equity shares were held by the individuals authorized by the
Group. The paid-in paid-in
Despite the lack of technical majority ownership, there exists a
parent-subsidiary relationship between the Primary Beneficiaries
and the VIEs through the aforementioned agreements with the
shareholders of the VIEs. The shareholders of the VIEs effectively
assigned all of their voting rights underlying their equity
interest in the VIEs to the Primary Beneficiaries. In addition,
through the other exclusive agreements, which consist of operating
agreements, technology consulting and services agreements and
license agreements, the Primary Beneficiaries, by themselves or
their wholly-owned subsidiaries in the PRC, demonstrate their
ability and intention to continue to exercise the ability to absorb
losses or receive economic benefits that could potentially be
significant to the VIEs. The VIEs are subject to operating risks,
which determine the variability of the Company’s interest in
those entities. Based on these contractual arrangements, the
Company consolidates the VIEs as required by SEC Regulation
S-X 3A-02 Consolidation
Unrecognized revenue-producing assets held by the VIEs include
certain internet content provisions and other licenses, domain
names and trademarks. The internet content provisions and other
licenses, which are held by the VIEs that provide the relevant
services, are required under relevant PRC laws, rules and
regulations for the operation of Internet businesses in the PRC,
and therefore are integral to the Company’s operations.
In March 2018, the contractual agreements for certain VIEs,
including Baidu Netcom and Beijing Perusal, were amended to include
the following terms:
a.
Exclusive equity purchase and transfer option
agreement
The Company has (i) an exclusive option to purchase, when and
to the extent permitted under PRC laws, all or part of the equity
interests in the VIE or all or part of the assets held by the VIE,
(ii) an exclusive right to cause the nominee shareholders to
transfer their equity interest in the VIE to the Company or any
designated third party and (iii) an obligation to provide
unlimited financial support to the VIEs when the VIEs become in
need of any form of reasonable financial support in the normal
operation of business. If the VIEs were to incur any loss and as a
result cannot repay any loans from the Company, the Company will
unconditionally forgive any such loans to the VIEs upon provision
by the VIEs of sufficient proof for its loss and incapacity to
repay.
b.
Proxy Agreements/Power of Attorney
The appointment of any individuals to exercise the powers and
rights assigned pursuant to the Proxy Agreement requires the
approval of the Company. All the activities in relation to such
powers and rights assigned are directed and approved by the
Company. The shareholders of the VIEs agreed to entrust all the
rights to exercise their voting power and any other rights as
shareholders of the VIEs to the person(s) designated by the
Company. The shareholders of the VIEs have each executed an
irrevocable power of attorney to appoint the person(s) designated
by the Company as their attorney-in-fact
As a result, the power and the rights pursuant to the Proxy
Agreements have since been effectively reassigned from Baidu Online
to the Company which has the power to direct the activities of the
VIEs that most significantly impact the VIEs’ economic
performance. The Company is also obligated to absorb the expected
losses of the VIE through the financial support as described above.
Therefore, the Company has replaced Baidu Online as the Primary
Beneficiary of Baidu Netcom and Beijing Perusal since March 2018.
As the VIEs were subject to indirect control by the Company through
WFOE immediately before and direct control immediately after the
contractual agreements were amended, the change of the primary
beneficiary of the VIEs was accounted for as a common control
transaction based on the carrying amount of the net assets
transferred.
In the opinion of the Company’s legal counsel, (i) the
ownership structure relating to the VIEs of the Company is in
compliance with existing PRC laws and regulations; (ii) the
contractual arrangements with the VIEs and their shareholders are
valid, binding and enforceable, and will not result in any
violation of PRC laws or regulations currently in effect; and
(iii) the performance of the VIEs and their shareholders is in
compliance with the articles of association and business licenses
of the VIEs.
However, uncertainties in the PRC legal system could cause the
Company’s current ownership structure to be found in
violation of any existing and/or future PRC laws or regulations and
could limit the Company’s ability, through the Primary
Beneficiaries, to enforce its rights under these contractual
arrangements. Furthermore, shareholders of the VIEs may have
interests that are different with those of the Company, which could
potentially increase the risk that they would seek to act in
contrary to the terms of the aforementioned agreements. In
addition, if the current structure or any of the contractual
arrangements were found to be in violation of any existing or
future PRC laws, the Company may be subject to penalties, which may
include but not be limited to, the cancellation or revocation of
the Company’s business and operating licenses, being required
to restructure the Company’s operations or discontinue the
Company’s operating activities. The imposition of any of
these or other penalties may result in a material and adverse
effect on the Company’s ability to conduct its operations. In
such case, the Company may not be able to operate or control the
VIEs, which may result in deconsolidation of the VIEs.
The following tables set forth the financial statement balances and
amounts of the VIEs and their subsidiaries which are included in
the consolidated financial statements after the elimination of
intercompany balances and transactions among VIEs and their
subsidiaries within the Group:
As of December 31, 2017
As of September 30, 2018
RMB RMB US$
(In
millions)
(unaudited)
Assets
Current
Cash and cash equivalents 4,045 1,365 199
Short-term investments 2,052 1,978 288
Accounts receivable, net 3,021 3,907 569
Others 5,280 4,381 638
14,398 11,631 1,694
Non-current
Fixed assets, net 2,845 4,310 628
Intangible assets, net 2,104 3,528 514
Long-term investments, net 10,614 18,197 2,650
Others 6,488 10,710 1,559
22,051 36,745 5,351
Total 36,449 48,376 7,045
Third-party liabilities
Current
Accounts payable and accrued liabilities 14,073 12,586 1,833
Customer advances and deposits 2,288 2,573 375
Others 2,414 7,849 1,143
18,775 23,008 3,351
Non-current 5,151 5,128 747
Total 23,926 28,136 4,098
Inter-company liabilities*
Inter-company payable to subsidiaries for technology consulting and
service fees 2,828 1,443 210
Others 4,605 9,184 1,337
Total 7,433 10,627 1,547
For the three months ended
September 30, September 30, 2018
RMB RMB US$
(In
millions)
(unaudited)
Total revenues 7,954 9,444 1,375
Net loss (139 ) (805 ) (117 )
Net cash provided by (used in) operating activities 3,640 3,146 458
Net cash provided by (used in) investing activities 102 (8,597 ) (1,252 )
Net cash provided by (used in) financing activities (2,502 ) 1,728 252
For the nine months ended
September 30, September 30, 2018
RMB RMB US$
(In
millions)
(unaudited)
Total revenues 21,733 24,931 3,630
Net income (loss) 891 (4,892 ) (712 )
Net cash provided by (used in) operating activities 7,595 5,101 743
Net cash provided by (used in) investing activities (3,123 ) (17,193 ) (2,503 )
Net cash provided by (used in) financing activities (3,331 ) 9,208 1,341
* Inter-company liabilities represent payable balances of each VIE
due to subsidiaries within the Group pursuant to the technology
consulting and service agreements. Other payables to non-VIE
As of September 30, 2018, there was no pledge or
collateralization of the VIEs’ assets other than those
pledged under the equity pledge agreements with respect to the VIE
contractual agreements. The amount of the net assets of the VIEs
was RMB9.6 billion (US$1.4 billion) as of September 30,
2018. The creditors of the VIEs’ third-party liabilities did
not have recourse to the general credit of the Company in the
normal course of business. The Company did not provide or intend to
provide financial or other supports not previously contractually
required to the VIEs during the years presented. |
| Use of Estimates | Use of Estimates
The preparation of the unaudited interim condensed consolidated
financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the period. Management evaluates estimates, including those related
to the standalone selling prices of performance obligations of
revenue contracts, accounts receivable allowances, credit loss
allowance for micro loan receivables, fair values of options to
purchase the Company’s or its subsidiaries’ ordinary
shares, fair values of certain debt and equity investments,
amortization and impairment of licensed copyrights, impairment of
long-lived assets, long-term investments and goodwill, the purchase
price allocation and fair value of noncontrolling interests with
respect to business combinations and acquisition of equity method
investees, deferred tax valuation allowance, and redeemable
noncontrolling interests, among others. Management bases the
estimates on historical experience and on various other assumptions
that are believed to be reasonable, the results of which form the
basis for making judgments about the carrying values of assets and
liabilities. Actual results could differ from these estimates. |
| Cash and Cash Equivalents | Cash and Cash Equivalents
Cash and cash equivalents primarily consist of cash, money market
funds, and investments in interest bearing demand deposit accounts,
time deposits and highly liquid investments with original
maturities of three months or less from the date of purchase and
are stated at cost which approximates their fair value. |
| Restricted Cash | Restricted Cash
Restricted cash mainly consists of the cash reserved in escrow
accounts at certain banks as online payment service deposits.
In November 2016, the FASB issued Accounting Standards Update
No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash beginning-of-period end-of-period |
| Loan and Interest Receivables, net of allowance | Loan and Interest Receivables, net of allowance
Loan and interest receivables consist primarily of micro loans to
individual borrowers. Such amounts are recorded at the principal
net of allowance for credit losses relating to micro loans, and
include accrued interest receivable as of the balance sheet date.
The loan periods granted by the Company to the borrowers related to
the micro loans generally range from one month to thirty-six |
| Licensed Copyrights | Licensed Copyrights
Licensed copyrights consist of professionally-produced content such
as movies, television series, variety shows, sports and other video
content acquired from external parties. The license fees are
capitalized and, unless prepaid, a corresponding liability recorded
when cost of the content is known, the content has been accepted by
us in accordance with the conditions of the license agreement and
the content is available for its first showing on our internet
platform. Licensed copyrights are carried at the lower of
unamortized cost or net realizable value. The current and
non-current portions of licensed copyrights of video content are
recorded in “Other current assets, net” or
“Intangible assets, net,” respectively. The licensed
copyrights include non-exclusive licensed copyrights and exclusive
licensed copyrights. With non-exclusive licensed copyrights, the
Company has the right to broadcast the contents only on its
internet platform. With exclusive licensed copyrights, in addition
to the broadcasting rights, the Company also has the right to
sublicense the contents to third parties.
Non-exclusive licensed copyrights, mainly comprising of newly
released movies, television series and seasonal variety shows, are
generally amortized using an accelerated method based on historical
viewership consumption patterns. Other non-exclusive licensed
copyrights, mainly comprising of library movies, television series
and variety shows and certain non-episodic features, are amortized
on a straight-line basis, as the consumption pattern based on
historical viewing data supports this amortization method.
Estimates of the consumption patterns for licensed copyrights are
reviewed periodically and revised, if necessary. The major factors
that impact the viewership consumption patterns include film box
office, ratings for television series and variety shows, user
traffic on our platforms, placement schedule, user tastes and
preferences, emerging cultural trends, merchandising and marketing
efforts. When the amortization pattern is revised, it is accounted
for as a change in accounting estimate prospectively in accordance
with ASC 250 (“ASC 250”), Accounting Changes and
Error Corrections
The purchase cost of exclusive licensed copyrights includes a
broadcasting right and a right to sublicense to third parties. The
Company allocates the content cost to these two rights when the
exclusive licensed copyrights are initially recognized, based on
the relative proportion of our estimate of the total revenues that
will be generated by each right. For the broadcasting right, which
is the portion of an exclusive licensed copyright that generates
direct and indirect advertising and membership revenues, the
content costs are amortized in accordance with ASC 920-350
(“ASC 920-350”), Entertainment-Broadcasters:
Intangibles—Goodwill and Other Entertainment—Films
On a periodic basis, the Company evaluates the program usefulness
of the broadcasting rights of its licensed copyrights and record
such rights at the lower of unamortized cost or estimated net
realizable value pursuant to the guidance in ASC 920-350. When
there is a change in the expected usage of licensed copyrights, the
Company estimates net realizable value of licensed copyrights to
determine if any impairment exists.
Net realizable value is determined by estimating the expected cash
flows generated from the provision of online advertising and
membership services, less any direct costs, over the remaining
useful lives of non-exclusive licensed copyrights. The Company
estimates advertising and membership cash flows for each category
of the content. Estimates that impact advertising and membership
cash flows include anticipated levels of demand for our online
advertising and membership services and the expected selling prices
of our advertisements and membership. For the right to sublicense
to third parties, the Company assesses recoverability in accordance
with ASC 926-20, Entertainment—Films: Other
Assets—Film Costs |
| Investments | Investments
Short-term investments
All highly liquid investments with original maturities of greater
than three months, but less than twelve months, are classified as
short-term investments. Investments that are expected to be
realized in cash during the next twelve months are also included in
short-term investments.
The Company accounts for short-term debt investments in accordance
with ASC topic 320 (“ASC 320”), Investments —
Debt Securities. “held-to-maturity” “available-for-sale,”
The securities that the Company has the positive intent and the
ability to hold to maturity are classified as held-to-maturity held-to-maturity
In accordance with ASC 320, the securities that are bought and held
principally for the purpose of selling them in the near term are
classified as trading securities. Unrealized holding gains and
losses for trading securities are included in earnings.
Other invested securities
Other invested securities represent investments purchased by the
Company for its financial services business which are resold to
third-party investors. These transactions do not meet the
requirements of asset derecognition in accordance with ASC topic
860 (“ASC 860”), Transfers and Servicing.
Long-term investments
The Company’s long-term investments consist of equity
investments with readily determinable fair value, equity
investments without readily determinable fair value, equity method
investments, and other investments accounted for at fair value.
Prior to adopting ASC topic 321 (“ASC 321”),
Investments — Equity Securities 325-20 325-20”), Investments-Other: Cost Method Investments
Management regularly evaluates the impairment of the cost method
investments based on the performance and financial position of the
investee as well as other evidence of market value. Such evaluation
includes, but is not limited to, reviewing the investee’s
cash position, recent financing, projected and historical financial
performance, cash flow forecasts and financing needs. An impairment
loss is recognized in earnings equal to the excess of the
investment’s cost over its fair value at the balance sheet
date of the reporting period for which the assessment is made. The
fair value would then become the new cost basis of the
investment.
The Company adopted ASC 321 on January 1, 2018 and the
cumulative effect of RMB1.9 billion (US$270 million) was recorded
as an adjustment to the opening retained earnings. Equity
investments, except for those accounted for under the equity
method, those that result in consolidation of the investee and
certain other investments, are measured at fair values, and any
changes in fair value are recognized in earnings. For equity
securities without readily determinable fair values and do not
qualify for the existing practical expedient in ASC 820 (“ASC
820”), Fair Value Measurements and Disclosures
Investments in entities in which the Company can exercise
significant influence but does not own a majority equity interest
or control are accounted for using the equity method of accounting
in accordance with ASC topic 323 (“ASC 323”),
Investments-Equity Method and Joint Ventures
In accordance with ASC 946-320 Financial
Services—Investment Companies, Investments—Debt and
Equity Securities, re-measured |
| Revenue Recognition | Revenue Recognition
The Company adopted ASC topic 606 (“ASC 606”),
Revenue from Contracts with Customers Revenue
Recognition.
Commencing on January 1, 2018, the Company recognizes revenue
in accordance with ASC 606. Revenue is recognized when control of
promised goods or services is transferred to the Company’s
customers in an amount of consideration to which an entity expects
to be entitled to in exchange for those goods or services. Starting
from January 1, 2018, pursuant to ASC 606, value added taxes
(“VAT”) was reclassified from cost of revenue to net
against revenues. The Company recognized VAT of RMB1.3 billion and
RMB1.7 billion (US$244 million) for the three-month periods ended
September 30, 2017 and 2018, respectively, and RMB3.4 billion and
RMB 4.5 billion (US$652 million) for the nine-month periods ended
September 30, 2017 and 2018, respectively.
The following table presents the Company’s revenues
disaggregated by revenue source:
For the three months ended
September 30, September 30, September 30,
RMB RMB US$
(In
millions)
(unaudited)
Online marketing 20,108 22,481 3,273
iQIYI membership service 1,697 2,852 415
iQIYI content distribution 276 835 122
Interest income earned from provision of financial services 495 408 59
Others 913 1,627 237
Other revenue 3,381 5,722 833
Total revenue 23,489 28,203 4,106
For the nine months ended
September 30, September 30, September 30,
RMB RMB US$
(In
millions)
(unaudited)
Online marketing 52,729 60,715 8,840
iQIYI membership service 4,607 7,421 1,081
iQIYI content distribution 958 1,641 239
Interest income earned from provision of financial services 1,029 1,724 251
Others 1,931 3,581 521
Other revenue 8,525 14,367 2,092
Total revenue 61,254 75,082 10,932
The Company’s revenue recognition policies effective on the
adoption date of ASC 606 are as follows:
Performance-based online marketing services
Cost-per-click
The Company’s auction-based pay-for-performance
Besides the Company’s traditional auction-based P4P services,
the Company also displays in-feed marketing to targeted users
through Baidu Feed. Customers pay the Company when a targeted user
clicks the in-feed marketing and are directed to its platforms.
Revenue is recognized when all of the revenue recognition criteria
set forth in ASC 606 are met, which is generally when a user clicks
on one of the customer-sponsored links or in-feed marketing.
Other performance-based online marketing services
To the extent the Company provides online marketing services based
on performance criteria other than cost-per-click,
Display advertisements
The Company provides display-based online advertising services to
its customers by integrating text description, image and video, and
displaying the advertisement in a prominent position of the search
result page, vertical search products or Baidu Feed. The Company
recognizes revenue in accordance with ASC 606, on a pro-rata
Online marketing services involving Baidu Union
Baidu Union is a program through which the Company expands
distribution of its customers’ sponsored links or
advertisements by leveraging the traffic of Baidu Union
members’ internet properties. The Company makes payments to
Baidu Union members for the acquisition of traffic. The Company is
the principal in these transactions, as it is primarily responsible
for fulfilling the service, has discretion in establishing pricing
and controls the advertising inventory before the transfer to
customers. Therefore, revenue is recognized on a gross basis on the
amount of fees it billed to its customers. Payments made to Baidu
Union members are recorded as traffic acquisition costs, which are
included in “Cost of revenues” in the consolidated
statements of comprehensive income.
Membership services
The Company offers membership services that provide subscribing
members access to stream a library of premium content in exchange
for upfront non-refundable
Content distribution
The Company generates revenues from sub-licensing content licensed
from third party vendors for cash and through nonmonetary
exchanges, mainly with other online video broadcasting companies.
The exclusive licensing agreements the Company enters into with
vendors has a definitive license period and provides the Company
the rights to sub-license these contents to other third parties.
The Company enters into a non-exclusive sub-license agreement with
a sub-licensee for a period that falls within the original
exclusive license period. For cash sub-licensing transactions, the
Company receives the sub-license fee upfront under the
sub-licensing arrangements and does not have any future obligation
once it has provided the underlying content to the sub-licensee
(which is provided at or before the beginning of the sub-license
period). The sub-license fees are recognized in accordance with ASC
606 and represents a license of functional intellectual property
that grants the right to use the Company’s licensed
copyrights, and revenue is recognized when the licensed copyright
is made available for the customer’s use and benefit. The
attributable cost of cash sublicensing transactions are recognized
as cost of revenues through the amortization of the sublicensing
right component of the exclusive licensed copyright, computed using
the individual-film-forecast-computation method in accordance with
ASC 926.
The Company enters into nonmonetary transactions to exchange online
broadcasting rights of licensed copyrights with other online video
broadcasting companies from time to time. The exchanged licensed
copyrights provide rights for each party to broadcast the licensed
copyrights received on its own website only. Each transferring
party retains the right to continue broadcasting the exclusive
content on its own website and/or sublicense the rights to the
content it surrendered in the exchange. The Company accounts for
these nonmonetary exchanges in accordance with ASC 606, and records
the transaction based on the fair value of the asset received
starting from January 1, 2018. Barter sublicensing revenue are
recognized in accordance with the same ASC 606 criteria above. The
Company estimates the fair value of the licensed copyrights
received based on various factors, including broadcasting schedule,
cast and crew, theme and popularity, box office and market share of
counterparties to the exchange.
The Company recognized barter sublicensing revenues of
RMB198 million and RMB503 million (US$73 million) and
related costs of RMB193 million and RMB523 million (US$76
million) for the three-month periods ended September 30, 2017
and 2018, respectively. The Company recognized barter sublicensing
revenues of RMB708 million and RMB824 million (US$120
million) and related costs of RMB596 million and
RMB818 million (US$119 million) for the nine-month periods
ended September 30, 2017 and 2018, respectively.
Financial services
The Company offers financial services which include provision of
installment payment services to consumers and wealth management
services to third-party investors. Interest income earned from
provision of financial services is reported as “Other
revenues” and reported on a net basis after deduction of
related interest costs incurred. The Company recognized gross
interest income of RMB1.1 billion and RMB616 million (US$90
million) and interest costs of RMB580 million and RMB208 million
(US$30 million) for the three-month periods ended September 30,
2017 and 2018, respectively. The Company recognized gross interest
income of RMB2.3 billion and RMB 3.3 billion (US$483 million) and
interest costs of RMB1.2 billion and RMB1.6 billion (US$232
million) for the nine-month periods ended September 30, 2017 and
2018, respectively. The financial services business was disposed
during the three-months ended September 30, 2018 (Note 4).
Barter transactions
The Company engages in certain barter transactions other than
licensed copyrights of video contents, such as advertising, from
time to time, and in such situations, follows the guidance set
forth in ASC 606. The transaction price of the nonmonetary
consideration is measured at fair value at contract inception. If
fair value cannot be reasonably estimated, the Company measures the
consideration indirectly by reference to the standalone selling
price of the services promised to the customer in exchange for the
consideration.
Other revenue recognition related policies
In accordance with ASC 606 ,
When either party to a revenue contract has performed, the Company
presents the contract in the consolidated balance sheets as a
contract asset or a contract liability, depending on the
relationship between the entity’s performance and the
customer’s payment. Contract liabilities were presented as
deferred revenue on the consolidated balance sheets. The increase
in deferred revenue as compared to the year
ended December 31, 2017 is a result of the increase
in consideration received from the Company’s customers.
The Company does not disclose the value of unsatisfied performance
obligations for (i) contracts with an original expected length
of one year or less and (ii) contracts for which the Company
recognizes revenue at the amount to which it has the right to
invoice for services performed.
The opening balance of contract assets were RMB832 million as of
January 1, 2018. As of September 30, 2018, contract assets of
RMB1.6 billion (US$233 million) were recognized and included in
“Other current assets, net” on the consolidated balance
sheet.
The Company provides sales incentives to customers which entitle
them to receive reductions in the price of the online marketing
services by meeting certain cumulative consumption requirements.
The Company accounts for these incentives granted to customers as
variable consideration in accordance with ASC 606. The amount of
variable consideration is measured based on the most likely amount
of incentives to be provided to customers. |
| Fair Value Measurements of Financial Instruments | Fair Value Measurements of Financial Instruments
Financial instruments are in the form of cash and cash equivalents,
restricted cash, short-term investments, other invested securities,
accounts receivable, loan and interest receivables, amounts due
from and due to related parties, other receivables, long-term
investments, short-term loans, accounts payable and accrued
liabilities, customer advances and deposits, derivative
instruments, notes payable and long-term loans. The carrying
amounts of these financial instruments, except for long-term equity
investments without readily determinable fair values, long-term
equity method investments, long-term notes payable and long-term
loans, approximate their fair values because of their generally
short maturities. Long-term equity investments with readily
determinable fair values, other invested securities, investments
accounted for at fair value, and derivative instruments are
adjusted to fair value at each reporting date. The carrying amounts
of long-term loans approximate fair values as the related interest
rates approximate rates currently offered by financial institutions
for similar debt instruments of comparable maturities. Fair value
of notes payable is extracted directly from the quoted market
price. |
| Segment Reporting | Segment Reporting
Starting from April 2017, Search Services and Transaction Services
were combined into one segment, namely, Baidu Core. The change in
reportable segments reflects the Company’s strategic shift
and the operational change to de-emphasize
The Company’s chief executive officer, who has been
identified as the chief operating decision marker
(“CODM”) reviews the operating results of Baidu Core
and iQIYI in order to allocate resources and assess the
Company’s performance. Accordingly, the financial statements
include segment information which reflects the current composition
of the reportable segments in accordance with ASC topic 280,
Segment Reporting. |
| Goodwill | Goodwill
The Company assesses goodwill for impairment in accordance with ASC
subtopic 350-20 350-20”), Intangibles –
Goodwill and Other: Goodwill 350-20. |
| Contingencies | Contingencies
The Company records accruals for certain of its outstanding legal
proceedings or claims when it is probable that a liability will be
incurred and the amount of loss can be reasonably estimated. The
Company evaluates, on a quarterly basis, developments in legal
proceedings or claims that could affect the amount of any accrual,
as well as any developments that would make a loss contingency both
probable and reasonably estimable. The Company discloses the amount
of the accrual if it is material.
When a loss contingency is not both probable and estimable, the
Company does not record an accrued liability but discloses the
nature and the amount of the claim if material. However, if the
loss (or an additional loss in excess of the accrual) is at least
reasonably possible, then the Company discloses an estimate of the
loss or range of loss, if such estimate can be made and is
considered material, or discloses that an estimate cannot be made.
The assessment of whether a loss is probable or reasonably
possible, and whether the loss or a range of loss is estimable,
often involves complex judgments about future events. Management is
often unable to estimate the loss or a range of loss, particularly
where (i) the damages sought are indeterminate, (ii) the
proceedings are in the early stages, or (iii) there is lacks
clear or consistent interpretation of laws specific to the
industry-specific complaints across different jurisdictions. In
such cases, there are considerable uncertainties regarding the
timing or ultimate resolution of such matters, including eventual
loss, fine, penalty or business impact, if any. |
