4. INVESTMENTS

Short-term Investments

As of December 31, 2016, all of the short-term held-to-maturity investments were time deposits in commercial banks with maturities of less than one year. The short-term available-for-sale investments are debt securities with maturities of less than one year purchased from commercial banks and other financial institutions, and equity securities of a publicly listed company. The short-term trading investments are debt securities the Company intends to trade within one year.

During the years ended December 31, 2014, 2015 and 2016, the Company recorded interest income from its short-term investments of RMB1.81 billion, RMB2.20 billion and RMB2.32 billion (US$334.78 million) in the consolidated statements of comprehensive income, respectively.

Long-term Investments

The Company’s long-term investments consist of cost method investments, equity method investments, held-to-maturity investments with original and remaining maturities of greater than 12 months and available-for-sale investments.

Cost method investments

The carrying amount of cost method investments was RMB7.30 billion and RMB12.94 billion (US$1.86 billion) as of December 31, 2015 and 2016, respectively. The Company’s investments in preferred shares of the investees are not considered in-substance common stock since these preferred shares contain terms such as dividend and liquidation preferences over the ordinary shares of the investees. In addition, the preferred shares do not have mandatory redemption features nor readily determinable fair values. As a result, these investments in preferred shares are accounted for under the cost method.

In 2016, the Company exchanged its equity shares of Uber (Cayman), Ltd. (“Uber China”), with Xiaoju Kuaizhi, Inc. (“Didi”), a China based ridesharing company,upon the merger of the two companies. The Company recognized a total gain of RMB1.99 billion (US$287.02 million) in “Other income,net”, and the retained investment in Didi was accounted for as a cost method investment.

Equity method investments

Equity Investment in Ctrip.com International, Ltd. (“Ctrip”) On October 26, 2015, the Company completed a share exchange transaction with Ctrip (“Ctrip transaction”), a company engaged in the online travelling business. The Company exchanged its beneficially owned 178,702,519 Class A ordinary shares and 11,450,000 Class B ordinary shares of its majority-owned subsidiary Qunar Cayman Islands Limited (“Qunar”) in exchange for 11,488,381 newly-issued ordinary shares of Ctrip. The Company recognized a total gain of RMB24.42 billion from the Ctrip transaction in “Other income, net” in the consolidated statements of comprehensive income for the year ended December 31, 2015. In 2016, further shares were acquired by the Company, and as of December 31, 2016 the Company held 20.49% of Ctrip’s outstanding shares. The Company accounts for the investment in Ctrip as an equity method investment in accordance with ASC 323 due to its significant influence over the entity.

The following tables set forth the summarized financial information of Ctrip:


	As of September 30,*
	2015		2016		2016
	RMB		RMB		US$
	(In thousands)
Current assets		25,750,458		52,222,057		7,521,541
Non-current assets		23,500,517		83,336,195		12,002,909
Current liabilities		18,873,779		33,173,779		4,778,018
Non-current liabilities		17,492,002		31,127,826		4,483,339
Noncontrolling interests		1,063,306		3,678,212		529,773


	For the twelve months ended September 30,*
	2014		2015			2016			2016
	RMB		RMB			RMB			US$
	(In thousands)
Total revenues		7,280,123		10,484,967			17,641,715			2,540,935
Gross profit		4,962,670		7,072,995			12,668,586			1,824,656
Income (loss) from operations		433,052		(115,056	)		(1,680,672	)		(242,067	)
Net income		625,520		2,052,526			(2,176,932	)		(313,543	)
Net income attributable to the investees		728,644		2,207,503			(2,000,291	)		(288,102	)

*	The Company adopted one-quarter lag in reporting its share of equity income in Ctrip

During the year ended December 31, 2016, the Company derecognized a group of assets sold to a third party and deconsolidated several subsidiaries due to the loss of a controlling equity interest in the subsidiary or substantive participating rights granted to other minority shareholders of the subsidiaries. An aggregate gain of RMB1.42 billion (US$204.32 million) was recognized in “Other income, net” during the year ended December 31, 2016 accordingly. The Company’s retained interest in these subsidiaries were accounted for as equity method investments. Fair values of investments retained were estimated by using the income approach or market approach. Inputs used in these methodologies primarily included future cash flows, discount rate, and the selection of comparable companies operating in similar businesses. The transactions with these equity investees are aggregately disclosed in Note 19.

As of December 31, 2015 and 2016, the Company held several other equity method investments besides Ctrip through its subsidiaries or VIEs, all of which were accounted for under the equity method since the Company can exercise significant influence but does not own a majority equity interest in or control them. The carrying amount of all of the equity method investments was RMB28.54 billion and RMB32.26 billion (US$4.65 billion) as of December 31, 2015 and 2016, respectively. The Company excluded the summarized information for these other equity method investments, as the other equity investees were insignificant for all the years presented.

Long-term held-to-maturity investments were time deposits in commercial banks with original and remaining maturities of greater than one year. The held-to-maturity investments are stated at amortized cost. Long-term available-for-sale equity investments represent investments in the equity securities of publicly listed companies. As the Company does not have significant influence over the investees, the investments were classified as available-for-sale and reported at fair value.

The methodology used in the determination of fair values for held-to-maturity investments and available-for-sale investments were summarized in Note 21.

The total impairment charges on long-term investments were RMB93.42 million, RMB116.98 million and RMB245.33 million (US$35.33 million) for the years ended December 31, 2014, 2015 and 2016, respectively.

The short-term held-to-maturity debt investments as well as the short-term available-for-sale investments will mature within one year; whereas the long-term held-to-maturity debt investments as well as the long-term available-for-sale debt investments will mature after one year through two years.


	As of December 31, 2015
	Cost or Amortized cost		Gross unrecognized holding gains		Gross unrecognized holding losses			Gross unrealized gains		Gross unrealized losses			Fair value
	RMB		RMB		RMB			RMB		RMB			RMB
	(In thousands)
Short-term investments
Held-to-maturity investments
Fixed-rate investments		36,942,840		197,848		(6,592	)							37,134,096
Available-for-sale investments
Fixed-rate debt investments		6,872,077							86,322					6,958,399
Adjustable-rate debt investments		13,137,500							187,885					13,325,385
Equity investments		600,543							142,075					742,618
Long-term investments:
Held-to-maturity investments
Fixed-rate investments		1,838,953				(32,507	)							1,806,446
Available-for-sale investments
Equity investments		322,269									(45,304	)		276,965


	As of December 31, 2016
	Cost or Amortized cost		Gross unrecognized holding gains		Gross unrecognized holding losses			Gross unrealized gains		Gross unrealized losses			Fair value		Fair value
	RMB		RMB		RMB			RMB		RMB			RMB		US$
	(In thousands)
Short-term investments
Held-to-maturity investments
Fixed-rate investments		41,802,170		70,018		(3,547	)							41,868,641		6,030,339
Available-for-sale investments
Fixed-rate debt investments		14,352,711							31,197		(6,052	)		14,377,856		2,070,842
Adjustable-rate debt investments		14,673,620							313,196					14,986,816		2,158,550
Equity investments		32,899									(4,112	)		28,787		4,146
Trading securities		7,685,697							61,739					7,747,436		1,115,863
Long-term investments:
Available-for-sale investments
Equity investments		527,596									(31,084	)		496,512		71,513