Intangible Assets, Net
 12 Months Ended
Dec. 31, 2014
Intangible Assets, Net  
Intangible Assets, Net

 

8. Intangible Assets, Net

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

Average

 

 

 

As of December 31,

 

Amortization

 

 

 

2013

 

2014

 

Periods

 

 

 

$

 

$

 

In years

 

Intangible assets not subject to amortization are comprised of the following:

 

 

 

 

 

 

 

Trademark

 
782,607

 
781,085

 

 

 

Intangible assets subject to amortization are comprised of the following:

 

 

 

 

 

 

 

Advertising agency agreement with SINA

 
106,790,000

 
106,790,000

 
9.75

 

License agreements with SINA

 
80,660,000

 
80,660,000

 
9.75

 

Exclusive rights with Baidu

 
45,315,329

 
45,151,494

 
0.25

 

Customer relationship

 
12,100,847

 
12,084,676

 
5.13

 

Database license

 
8,300,000

 
8,300,000

 
3.25

 

Favorable lease term

 
9,541,891

 
9,541,891

 
16.95

 

Computer software licenses

 
5,708,188

 
9,534,433

 
4.88

 

Non-compete agreements

 
3,420,712

 
3,415,152

 
0.75

 

Customer contracts

 
1,057,842

 
1,054,964

 
4.94

 

Domain name

 
214,611

 
229,709

 
4.68

 

 

 

 

 

 

 

 

 

 

 
273,109,420

 
276,762,319

 
9.55

 

Less: Accumulated amortization

 

 

 

 

 

 

 

Advertising agency agreement

 
(44,495,832

)
(51,286,533

)

 

 

License agreements with SINA

 
(34,280,500

)
(39,377,764

)

 

 

Exclusive rights with Baidu

 
(34,693,471

)
(43,034,803

)

 

 

Customer relationship

 
(6,464,705

)
(8,086,039

)

 

 

Database license

 
(4,150,001

)
(5,126,472

)

 

 

Favorable lease term

 
(637,435

)
(1,167,905

)

 

 

Computer software licenses

 
(3,963,457

)
(4,784,950

)

 

 

Non-compete agreements

 
(3,097,470

)
(3,349,230

)

 

 

Customer contracts

 
(832,950

)
(871,174

)

 

 

Domain name

 
(44,456

)
(77,863

)

 

 

 

 

 

 

 

 

 

 

Intangible assets subject to amortization, net

 
140,449,143

 
119,599,586

 

 

 

 

 

 

 

 

 

 

 

Total intangible assets, net

 
141,231,750

 
120,380,671

 

 

 

 

In 2011, the Group purchased exclusive rights from Baidu, Inc (‘‘Baidu’’) which allow it to sell Baidu’s real estate related Brand Link product, which is a form of keyword advertising, and to use and operate Baidu’s exclusive real estate-related web channel for $47,612,100 through August 2014. In October 2013, the Group extended these rights with Baidu to March 2015, without paying additional consideration. The payment schedule of the remaining liability for exclusive rights was also deferred through the extension period. The fair value of $43,847,992 was recognized in 2011 and calculated by discounting the future cash payments to be made from 2012 to 2014. The difference between the fair value and the principal amount of $3,764,108 is being amortized using the effective interest method over the term of the exclusive rights and amounted to $1,882,804, $935,177 and $52,922 for the years ended December 31, 2012, 2013 and 2014, respectively.

 

The advertising agency agreement and license agreements with SINA were recognized in connection with the Group’s acquisition of COHT in 2009, which allows the Group to operate SINA’s existing real estate and home furnishing related channels and have the exclusive right to sell advertising relating to real estate, home furnishing and construction materials on these channels as well as SINA’s other websites through 2019. If the Group sells advertising on SINA’s websites other than above channels, it will pay SINA fees of approximately 15% of the revenues generated from these sales. The acquisition cost was recognized as an intangible asset and amortized over the term of the agreement. In March 2014, the advertising agency agreement and license agreements originally signed between the Group and SINA in 2009 were extended an additional five years to March 2024 for no additional consideration. All other terms of the agreements remain the same.

 

The Group paid $14,249,180, $15,347,915 and $9,004,710 in connection with the exclusive rights in 2012, 2013 and 2014, respectively.

 

Amortization expense was $38,701,651, $37,009,330 and $24,677,508 for the years ended December 31, 2012, 2013 and 2014, respectively. The Group expects to record amortization expenses of $16,648,450, $14,183,003, $13,932,242, $12,813,362 and $11,936,725 for the years ending December 31, 2015, 2016, 2017, 2018 and 2019, respectively.