CHONGQING JIANSHE MOTORCYCLE CO., LTD.
AUDITORS’ REPORT
FOR THE YEAR ENDED DECEMBER 31, 2016 PCPAR[2017] No. ZE10382
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
AUDITORS’ REPORT AND FINANCIAL STATEMENTS
(For the Year Ended December 31, 2016)
Contents Page 1. Auditors' Report 1-2 2. Financial Statements
Consolidated Balance Sheet and the Company's Balance Sheet 1-4 Consolidated Income Statement and the Company's Income 5-6 Statement
Consolidated Statement of Cash Flows and the Company's 7-8 Statement of Cash Flows
Consolidated Statement of Changes in Owners' Equity and the 9-12 Company's Statement of Changes in Owners' Equity
Notes to the Financial Statements 1-85
Chongqing Jianshe Motorcycle Co., Ltd.
Consolidated Balance Sheet
December 31, 2016
(Expressed in Renminbi unless otherwise stated)
|||||
|-|-|-|-|
|Assets|Note 5|Balance as at December 31, 2016|Balance as at January 1, 2016|
|Current assets:||||
|Cash and cash equivalents|5.1|514,414,822.57|302,660,758.76|
|Deposit reservation for balance||||
|Lending funds||||
|Financial assets measured at fair value through current profit and loss||||
|Derivative financial assets||||
|Notes receivable|5.2|14,907,890.35|47,008,704.63|
|Accounts receivable|5.3|255,587,439.92|217,759,208.43|
|Advances to suppliers|5.4|10,891,933.02|9,309,626.86|
|Premiums receivable||||
|Reinsurance accounts receivable||||
|Provision of cession receivable||||
|Interest receivable||||
|Dividends receivable||||
|Other receivables|5.5|8,579,890.08|257,809,644.42|
|Redemptory monetary capital for sale||||
|Inventories|5.6|201,207,030.54|146,350,934.34|
|Classified as assets held for sale||||
|Non-current assets maturing within one year||||
|Other current assets|5.7|1,734,063.70|5,430,548.06|
|Total current assets||1,007,323,070.18|986,329,425.50|
|Non-current assets:||||
|Loans and payments on behalf||||
|Available-for-sale financial assets|5.8|||
|Held-to-maturity investments||||
|Long-term receivables||||
|Long-term equity investments|5.9|83,178,112.31|83,381,316.13|
|Investment properties|5.10|115,326,025.61||
|Fixed assets|5.11|325,843,861.71|395,975,005.27|
|Construction in progress|5.12|2,438,832.43|40,435,429.90|
|Project materials||||
|Disposal of fixed assets||||
|Productive biological assets||||
|Oil and gas assets||||
|Intangible assets|5.13|11,696,305.26|28,270,393.63|
|Development expenses||||
|Goodwill||||
|Long-term deferred expenses|5.14|2,471,588.65|3,926,091.85|
|Deferred income tax assets|5.15|1,816,875.69|1,819,643.46|
|Other non-current assets|5.16|9,240,209.19|10,478,525.70|
|Total non-current assets||552,011,810.85|564,286,405.94|
|Total assets||1,559,334,881.03|1,550,615,831.44|

Accompanying notes to financial statements are an integral part of the financial statements.
Legal Representative of Enterprise: Accounting Principal: Accounting Firm's Principal:
Financial Statements Page 1
Chongqing Jianshe Motorcycle Co., Ltd.
Consolidated Balance Sheet (Continued)
December 31, 2016
(Expressed in Renminbi unless otherwise stated)
|||||
|-|-|-|-|
|Liabilities and Shareholder's Equity|Note 5|Balance as at December 31, 2016|Balance as at January 1, 2016|
|Current liabilities:||||
|Short-term borrowings|5.17|224,500,000.00|217,000,000.00|
|Borrowings from central bank||||
|Deposits from customers and interbank||||
|Borrowings from banks and other financial institutions||||
|Financial liabilities measured at fair value through current profit and loss||||
|Derivative financial liabilities||||
|Notes payable|5.18|718,560,000.00|760,555,000.00|
|Accounts payable|5.19|193,368,485.45|75,885,325.83|
|Advances from customers|5.20|9,126,126.31|1,401,319.97|
|Financial assets sold for repurchase||||
|Handling charges and commissions payable||||
|Employee remuneration payable|5.21|2,629,812.54|1,654,497.94|
|Taxes and surcharges payable|5.22|16,163,190.70|16,857,642.89|
|Interest payable||||
|Dividends payable||||
|Other payables|5.23|40,693,888.64|16,874,326.53|
|Reinsurance accounts payable||||
|Provision for insurance contracts||||
|Acting trading securities||||
|Acting underwriting securities||||
|Classified as liabilities held for sale||||
|Non-current liabilities maturing within one year|5.24|36,100,000.00|75,000,000.00|
|Other current liabilities||||
|Total current liabilities||1,241,141,503.64|1,165,228,113.16|
|Non-current liabilities:||||
|Long-term borrowings|5.25|48,590,000.00|128,490,000.00|
|Bonds payable||||
|Including: Preferred shares||||
|Perpetual bond||||
|Long-term payables||||
|Long-term employee remuneration payable||||
|Special payables||||
|Estimated liabilities||||
|Deferred income||||
|Deferred income tax liabilities||||
|Other non-current liabilities||||
|Total non-current liabilities||48,590,000.00|128,490,000.00|
|Total liabilities||1,289,731,503.64|1,293,718,113.16|
|Owners' equity||||
|Share capital|5.26|119,375,000.00|119,375,000.00|
|Other equity instruments||||
|Including: Preferred shares||||
|Perpetual bond||||
|Capital reserves|5.27|958,565,294.29|958,565,294.29|
|Less: treasury stock||||
|Other comprehensive income|5.28|9,800.00|9,800.00|
|Special reserves||||
|Surplus reserves|5.29|125,686,000.00|125,686,000.00|
|General risk reserves||||
|Undistributed profits|5.30|-935,253,002.64|-947,520,008.78|
|Total equity attributable to owners of the parent company||268,383,091.65|256,116,085.51|
|Minority equity||1,220,285.74|781,632.77|
|Total owners' equity||269,603,377.39|256,897,718.28|
|Total liabilities and owners' equity||1,559,334,881.03|1,550,615,831.44|

Legal Representative of Enterprise: Accounting Principal: Accounting Firm's Principal:
Financial Statements Page 2
Chongqing Jianshe Motorcycle Co., Ltd.
Balance Sheet
December 31, 2016
(Expressed in Renminbi unless otherwise stated)
|||||
|-|-|-|-|
|Assets|Note 13|Balance as at December 31,2016|Balance as at January 1,2016|
|Current assets:||||
|Cash and cash equivalents||290,491,337.89|47,345,832.30|
|Financial assets measured at fair value through current profit and loss||||
|Derivative financial assets||||
|Notes receivable|||2,000,000.00|
|Accounts receivable|13.1|4,307.10|527,570.36|
|Advances to suppliers||1,182,599.45||
|Interest receivable||||
|Dividends receivable||||
|Other receivables|13.2|5,021,347.04|253,605,619.11|
|Inventories||||
|Classified as assets held for sale||||
|Non-current assets maturing within one year||||
|Other current assets||131,046.64||
|Total current assets||296,830,638.12|303,479,021.77|
|Non-current assets:||||
|Available-for-sale financial assets||||
|Held-to-maturity investments||||
|Long-term receivables||||
|Long-term equity investments|13.3|251,338,112.31|251,541,316.13|
|Investment properties||115,326,025.61||
|Fixed assets||70,991,009.78|183,278,272.00|
|Construction in progress||||
|Project materials||||
|Disposal of fixed assets||||
|Productive biological assets||||
|Oil and gas assets||||
|Intangible assets|||16,261,765.57|
|Development expenses||||
|Goodwill||||
|Long-term deferred expenses||||
|Deferred income tax assets||||
|Other non-current assets||||
|Total non-current assets||437,655,147.70|451,081,353.70|
|Total assets||734,485,785.82|754,560,375.47|

Accompanying notes to financial statements are an integral part of the financial statements.
Legal Representative of Enterprise: Accounting Principal: Accounting Firm's Principal:
Financial Statements Page 3
Chongqing Jianshe Motorcycle Co., Ltd.
Balance Sheet (Continued)
December 31, 2016
(Expressed in Renminbi unless otherwise stated)
|||||
|-|-|-|-|
|Liabilities and Shareholder's Equity|Note 13|Balance as at December 31, 2016|Balance as at January 1, 2016|
|Current liabilities:||||
|Short-term borrowings|||25,000,000.00|
|Financial liabilities measured at fair value through current profit and loss||||
|Derivative financial liabilities||||
|Notes payable||142,850,000.00|152,850,000.00|
|Accounts payable||147,819,149.98|42,646,214.18|
|Advances from customers||180,083.38|220,124.53|
|Employee remuneration payable||14,467.08|58,886.32|
|Taxes and surcharges payable||15,945,044.76|15,268,307.65|
|Interest payable||||
|Dividends payable||||
|Other payables||240,371,017.71|216,034,017.49|
|Classified as liabilities held for sale||||
|Non-current liabilities maturing within one year|||67,000,000.00|
|Other current liabilities||||
|Total current liabilities||547,179,762.91|519,077,550.17|
|Non-current liabilities:||||
|Long-term borrowings|||47,000,000.00|
|Bonds payable||||
|Including: Preferred shares||||
|Perpetual bond||||
|Long-term payables||||
|Long-term employee remuneration payable||||
|Special payables||||
|Estimated liabilities||||
|Deferred income||||
|Deferred income tax liabilities||||
|Other non-current liabilities||||
|Total non-current liabilities|||47,000,000.00|
|Total liabilities||547,179,762.91|566,077,550.17|
|Owners' equity||||
|Share capital||119,375,000.00|119,375,000.00|
|Other equity instruments||||
|Including: Preferred shares||||
|Perpetual bond||||
|Capital reserves||958,565,294.29|958,565,294.29|
|Less: treasury stock||||
|Other comprehensive income||9,800.00|9,800.00|
|Special reserves||||
|Surplus reserves||125,686,000.00|125,686,000.00|
|Undistributed profits||-1,016,330,071.38|-1,015,153,268.99|
|Total owners' equity||187,306,022.91|188,482,825.30|
|Total liabilities and owners' equity||734,485,785.82|754,560,375.47|

Accompanying notes to financial statements are an integral part of the financial statements.
Legal Representative of Enterprise: Accounting Principal: Accounting Firm's Principal:
Financial Statements Page 4
Chongqing Jianshe Motorcycle Co., Ltd.
Consolidated Income Statement
FOR THE YEAR ENDED DECEMBER 31, 2016
(Expressed in Renminbi unless otherwise stated)
|||||
|-|-|-|-|
|Item|Note 5|Year 2016|Year 2015|
|Ⅰ. Total operating income||8 73,286,486.75|1 ,341,331,910.93|
|Including: operating income|5.31|8 73,286,486.75|1,341,331,910.93|
|Interest income||||
|Premiums earned||||
|Income from handling charges and commissions||||
|Ⅱ. Total operating costs||8 60,400,775.55|1 ,605,453,382.35|
|Including: Operating costs|5.31|7 12,724,948.38|1 ,251,939,003.07|
|Interest expenses||||
|Handling charges and commissions expenses||||
|Surrender value||||
|Net amount of compensation payout||||
|Net amount withdrawn for insurance contract reserves||||
|Policy dividend payment||||
|Reinsurance costs||||
|Taxes and surcharges|5.32|6 ,268,442.01|1 5,487,280.18|
|Selling expenses|5.33|2 7,429,578.93|7 6,054,125.60|
|General and administrative expenses|5.34|7 7,041,000.34|1 71,145,874.26|
|Financial expenses|5.35|3 6,595,522.33|8 3,560,026.12|
|Losses from asset impairment|5.36|3 41,283.56|7 ,267,073.12|
|Plus: gains from changes in fair value ("-" for losses)||||
|Investment income ("-" for losses)|5.37|3 ,128,796.18|4 98,750,796.47|
|Including: income from investment in associates and joint ventures|5.37|3 ,128,796.18|1 2,442,935.76|
|Foreign exchange gains ("-" for losses)||||
|Ⅲ.Operating profits ("-" for losses)||1 6,014,507.38|2 34,629,325.05|
|Plus: Non-operating income|5.38|1 ,259,915.28|1 1,418,743.79|
|Including: gains from disposal of non-current assets|5.38||3 ,426,624.42|
|Less: Non-operating expenses|5.39|1 ,959,872.08|7 05,323.13|
|Including: Losses on disposal of non-current assets|5.39|3 ,646.70|4 34,139.22|
|Ⅳ. Total profits ("-" for total losses)||1 5,314,550.58|2 45,342,745.71|
|Less: income tax expenses|5.40|2 ,608,891.47|4 ,412,314.65|
|Ⅴ. Net profit ("-" for net loss)||1 2,705,659.11|2 40,930,431.06|
|Net profit attributable to owners of the parent company||1 2,267,006.14|2 40,735,112.20|
|Non-controlling interests||4 38,652.97|1 95,318.86|
|Ⅵ. Net of tax of other comprehensive income||||
|Net of tax of other comprehensive income attributable to owners of the parent company||||
|1. Other comprehensive income that cannot be reclassified into gains and losses subsequently||||
|(1)Changes in net liabilities or net assets arising from re-measurement of defined benefit plan||||
|(2)Shareinothercomprehensiveincomeoftheinvesteecannotbereclassifiedintogainsandlossesundertheequitymethod||||
|2.Other comprehensive income to be reclassified into gains and losses subsequently||||
|(1)Share in other comprehensive income of the investee to be reclassified into gains and losses under the equity method||||
|(2)Gains and losses on changes in fair value of financial assets available for sale||||
|(3)Gains and losses arising from reclassification of held-to-maturity investments as financial assets available for sale||||
|(4)Effective portion of cash flow hedging gains and losses||||
|(5)Translation differences of financial statements denominated in foreign currency||||
|(6)Others||||
|Net of tax of other comprehensive income attributable to non-controlling shareholders||||
|Ⅶ.Total comprehensive incomes||1 2,705,659.11|2 40,930,431.06|
|Total comprehensive income attributable to owners of the parent company||1 2,267,006.14|2 40,735,112.20|
|Total comprehensive income attributable to minority shareholders||4 38,652.97|1 95,318.86|
|Ⅷ. Earnings per share:||||
|1.Basic earnings per share (RMB/Share)||0 .103|2 .017|
|2.Diluted earnings per share (RMB/Share)||0 .103|2 .017|

Accompanying notes to financial statements are an integral part of the financial statements.
Legal Representative of Enterprise: Accounting Principal: Accounting Firm's Principal:
Financial Statements Page 5
Chongqing Jianshe Motorcycle Co., Ltd.
Income Statement
FOR THE YEAR ENDED DECEMBER 31, 2016
(Expressed in Renminbi unless otherwise stated)
Note
|||||
|-|-|-|-|
|Item|Note13|Year 2016|Year 2015|
|Ⅰ. Operating income|13.4|610,825,517.52|916,524,874.05|
|Less: Operating costs|13.4|577,514,305.99|951,519,134.10|
|Taxes and surcharges||3,048,149.21|7,097,726.80|
|Selling expenses|||7,875,528.62|
|General and administrative expenses||22,093,139.50|83,455,935.38|
|Financial expenses||11,788,734.18|35,443,970.39|
|Losses from asset impairment||128,688.96|239,241,816.94|
|Plus: gains from changes in fair value ("-" for losses)||||
|Investment income ("-" for losses)|13.5|3,128,796.18|9,857,041.01|
|Including: income from investment in associates and joint ventures|13.5|3,128,796.18|16,907,175.88|
|Ⅱ. Operating profits ("-" for losses)||-618,704.14|-398,252,197.17|
|Plus: Non-operating income||410,000.00|400,327,288.14|
|Including: gains from disposal of non-current assets||||
|Less: Non-operating expenses||968,098.25|255,016.79|
|Including: Losses on disposal of non-current assets||3,646.70|147,576.58|
|Ⅲ.Total profits ("-" for total losses)||-1,176,802.39|1,820,074.18|
|Less: income tax expenses||||
|Ⅳ. Net profit ("-" for net loss)||-1,176,802.39|1,820,074.18|
|Ⅴ. Net of tax of other comprehensive income||||
|1.Other comprehensive income that cannot be reclassified into gains and losses subsequently||||
|(1)Changes in net liabilities or net assets arising from re-measurement of defined benefit plan||||
|(2)Share in other comprehensive income of the investee cannot be reclassified into gains and losses under the equity method||||
|2.Other comprehensive income to be reclassified into gains and losses subsequently||||
|(1)Share in other comprehensive income of the investee to be reclassified into gains and losses under the equity method||||
|(2)Gains and losses on changes in fair value of financial assets available for sale||||
|(3)Gains and losses arising from reclassification of held-to-maturity investments as financial assets available for sale||||
|(4)Effective portion of cash flow hedging gains and losses||||
|(5)Translation differences of financial statements denominated in foreign currency||||
|(6)Others||||
|Ⅵ. Total comprehensive incomes||-1,176,802.39|1,820,074.18|
|Ⅶ. Earnings per share:||||
|1.Basic earnings per share (RMB/Share)||||
|2.Diluted earnings per share (RMB/Share)||||

Accompanying notes to financial statements are an integral part of the financial statements.
Legal Representative of Enterprise: Accounting Principal: Accounting Firm's Principal:
Financial Statements Page 6
Chongqing Jianshe Motorcycle Co., Ltd.
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED DECEMBER 31, 2016
(Expressed in Renminbi unless otherwise stated)
|||||
|-|-|-|-|
|Item|Note 5|Year 2016|Year 2015|
|Ⅰ.Cash flows from operating activities:||||
|Cash received from sale of goods and rendering of services||503,501,706.64|924,895,630.63|
|Net increase in customer bank deposits and placement from banks and other financial institutions||||
|Net increase in borrowings from central bank||||
|Net increase in loans from other financial institutions||||
|Premiums received from original insurance contracts||||
|Net cash received from reinsurance business||||
|Net increase in deposits and investments from policyholders||||
|Net increase from disposal of financial assets at fair value whose fluctuation is attributed to profit or loss for current period||||
|Cash received from interest, handling charges and commissions||||
|Net increase in loans from banks and other financial institutions||||
|Net capital increase in repurchase business||||
|Refunds of taxes and surcharges||4,493,153.97|5,449,365.90|
|Cash received from other operating activities|5.41|3,401,305.80|15,051,156.84|
|Sub-total of cash inflows from operating activities||511,396,166.41|945,396,153.37|
|Cash paid for goods purchased and services received||294,912,075.87|585,375,677.51|
|Net increase in loans and advances to customers||||
|Net increase in deposits in central bank and other banks and financial institutions||||
|Cash paid for original insurance contract claims||||
|Cash paid for interests, handling charges and commissions||||
|Cash paid for policy dividends||||
|Cash paid to and on behalf of employees||59,900,452.77|173,153,899.42|
|Cash paid for taxes and surcharges||23,191,284.40|46,733,869.09|
|Cash paid for other operating activities|5.41|24,773,234.35|57,826,696.74|
|Sub-total of cash outflows from operating activities||402,777,047.39|863,090,142.76|
|Net cash flows from operating activities||108,619,119.02|82,306,010.61|
|Ⅱ. Cash flows from investing activities:||||
|Cash received from disposal of investments||||
|Cash received from returns on investments||3,332,000.00|34,460,000.00|
|Net cash received from disposal of fixed assets, intangible assets and other long-term assets|||1,745,492.45|
|Cash inflow from disposal of subsidiaries and other operating units||||
|Cash received from other investing activities||||
|Sub-total of cash inflows from investing activities||3,332,000.00|36,205,492.45|
|Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets||19,363,354.60|81,268,875.00|
|Cash paid for investments||||
|Net increase in pledge loans||||
|Net cash paid to acquire subsidiaries and other business units||||
|Cash paid for other investing activities|5.41||3,750,149.57|
|Sub-total of cash outflows from investing activities||19,363,354.60|85,019,024.57|
|Net cash flows from investing activities||-16,031,354.60|-48,813,532.12|
|Ⅲ.Cash flows from financing activities||||
|Cash received from investors||||
|Including: cash received by subsidiaries from investments by minority shareholders||||
|Cash received from borrowings||228,000,000.00|1,166,290,000.00|
|Cash received from bonds issuance||||
|Cash received from other financing activities|5.41|1,636,082,041.12|1,800,692,830.44|
|Sub-total of cash inflows from financing activities||1,864,082,041.12|2,966,982,830.44|
|Cash paid for debt repayments||339,300,000.00|1,305,000,000.00|
|Cash paid for distribution of dividends and profits or payment of interest||14,017,249.00|87,034,032.49|
|Including: dividends and profits paid to minority shareholders by subsidiaries||||
|Cash paid for other financing activities|5.41|1,353,227,549.97|1,621,039,606.73|
|Sub-total of cash outflows from financing activities||1,706,544,798.97|3,013,073,639.22|
|Net cash flows from financing activities||157,537,242.15|-46,090,808.78|
|Ⅳ. Effect of fluctuation in exchange rate on cash and cash equivalents||236.08|686,261.04|
|Ⅴ. Net increase in cash and cash equivalents||250,125,242.65|-11,912,069.25|
|Plus: balance of cash and cash equivalents at the beginning of the period||23,643,515.81|35,555,585.06|
|Ⅵ. Balance of cash and cash equivalents at the end of the period||273,768,758.46|23,643,515.81|

Accompanying notes to financial statements are an integral part of the financial statements.
Legal Representative of Enterprise: Accounting Principal: Accounting Firm's Principal:
Financial Statements Page 7
Chongqing Jianshe Motorcycle Co., Ltd.
Statement of Cash Flows
FOR THE YEAR ENDED DECEMBER 31, 2016
(Expressed in Renminbi unless otherwise stated)
||||
|-|-|-|
|Item|Year 2016|Year 2015|
|Ⅰ.Cash flows from operating activities:|||
|Cash received from sale of goods and rendering of services|330,670,982.08|490,046,185.33|
|Refunds of taxes and surcharges||1,827,925.86|
|Cash received from other operating activities|1,009,636.06|3,275,718.69|
|Sub-total of cash inflows from operating activities|331,680,618.14|495,149,829.88|
|Cash paid for goods purchased and services received|179,291,662.89|435,189,154.01|
|Cash paid to and on behalf of employees|29,387,896.21|118,533,275.30|
|Cash paid for taxes and surcharges|12,571,673.19|7,864,311.20|
|Cash paid for other operating activities|1,445,414.31|18,487,200.13|
|Sub-total of cash outflows from operating activities|222,696,646.60|580,073,940.64|
|Net cash flows from operating activities|108,983,971.54|-84,924,110.76|
|Ⅱ. Cash flows from investing activities:|||
|Cash received from disposal of investments||295,800.00|
|Cash received from returns on investments|3,332,000.00|34,460,000.00|
|Net cash received from disposal of fixed assets, intangible assets and other long-term assets||98,316.45|
|Cash inflow from disposal of subsidiaries and other operating units|||
|Cash received from other investing activities|||
|Sub-total of cash inflows from investing activities|3,332,000.00|34,854,116.45|
|Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets|482,967.78|2,937,344.55|
|Cash paid for investments||300.00|
|Net cash paid to acquire subsidiaries and other business units|||
|Cash paid for other investing activities|||
|Sub-total of cash outflows from investing activities|482,967.78|2,937,644.55|
|Net cash flows from investing activities|2,849,032.22|31,916,471.90|
|Ⅲ.Cash flows from financing activities|||
|Cash received from investors|||
|Cash received from borrowings||854,300,000.00|
|Cash received from bonds issuance|||
|Cash received from other financing activities|2,646,586,755.28|2,392,099,963.32|
|Sub-total of cash inflows from financing activities|2,646,586,755.28|3,246,399,963.32|
|Cash paid for debt repayments|139,000,000.00|927,000,000.00|
|Cash paid for distribution of dividends and profits or payment of interest||61,178,570.38|
|Cash paid for other financing activities|2,376,323,703.90|2,223,020,195.22|
|Sub-total of cash outflows from financing activities|2,515,323,703.90|3,211,198,765.60|
|Ⅳ. Net cash flows from financing activities|131,263,051.38|35,201,197.72|
|Effect of fluctuation in exchange rate on cash and cash equivalents|||
|Ⅴ. Net increase in cash and cash equivalents|243,096,055.14|-17,806,441.14|
|Plus: balance of cash and cash equivalents at the beginning of the period|4,486,524.01|22,292,965.15|
|Ⅵ. Balance of cash and cash equivalents at the end of the period|247,582,579.15|4,486,524.01|

Accompanying notes to financial statements are an integral part of the financial statements.
Legal Representative of Enterprise: Accounting Principal: Accounting Firm's Principal:
Financial Statements Page 8
|||||||||||||||||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|6102raeY|ytiuqe'srenwolatoT|||82.817,798,652|||||82.817,798,652|11.956,507,21|11.956,507,21||||||||||||||||||||93.773,306,962|
||ytiuqeytironiM|||77.236,187|||||77.236,187|79.256,834|79.256,834||||||||||||||||||||47.582,022,1|
||ynapmoctnerapehtfosrenwootelbatubirttaytiuqE|detubirtsidnUstiforp||87.800,025,749-|||||87.800,025,749-|41.600,762,21|41.600,762,21||||||||||||||||||||46.200,352,539-|
|||ksirsevreserlareneG||||||||||||||||||||||||||||||
|||sevresersulpruS||00.000,686,521|||||00.000,686,521||||||||||||||||||||||00.000,686,521|
|||sevreserlaicepS||||||||||||||||||||||||||||||
|||evisneherpmocrehtO emocni||00.008,9|||||00.008,9||||||||||||||||||||||00.008,9|
|||kcotsyrusaert:sseL||||||||||||||||||||||||||||||
|||sevreserlatipaC||92.492,565,859|||||92.492,565,859||||||||||||||||||||||92.492,565,859|
|||stnemurtsniytiuqerehtO|srehtO|||||||||||||||||||||||||||||
||||dnoblautepreP|||||||||||||||||||||||||||||
||||serahsderreferP|||||||||||||||||||||||||||||
|||latipacerahS||00.000,573,911|||||00.000,573,911||||||||||||||||||||||00.000,573,911|
|metI||||raeytsalfo13rebmeceDtasaecnalaB.Ⅰ|seicilopgnitnuoccanisegnahcrofstnemtsujda:sulP|raeyroirpnisrorregnitnuoccafonoitcerrocrofstnemtsujdA|lortnocnommocrednuseititnegnivlovninoitanibmocssenisuB|srehtO|raeytnerrucehtfo1yraunaJtasaecnalaB.Ⅱ|)sessolrof"-"(raeytnerrucehtrof)esaerced(/esaercnI.Ⅲ|semocnievisneherpmoclatoT.1|srenwoybdecuderrodetubirtnoclatipaC.2|sredloherahsmorfserahsnommoC)1(|stnemurtsniytiuqerehtofosredlohehtmorflatipactnemtsevnI)2(|ytiuqe'srenwoehtnidedulcnitnemyapdesab-erahsehtfotnuomA)3(|srehtO)4(|stiforpfonoitubirtsiD.3|sevresersulprusfolawardhtiW)1(|evreserksirlarenegfolawardhtiW)2(|sredloherahsrosrenwootnoitubirtsiD)3(|srehtO)4(|ytiuqe'srenwofodrawrof-yrraclanretnI.4|latipacni-diapotnisevreserlatipacfonoisrevnoC)1(|latipacni-diapotnisevresersulprusfonoisrevnoC)2(|sessolgnittesffosevresersulpruS)3(|srehtO)4(|sevreserlaicepS.5|raeytnerrucehtninwardhtiwtnuomA)1(|raeytnerrucehtnidesutnuomA)2(|srehtO.6|raeytnerrucehtfoecnalabgnidnE.Ⅳ|

|||||||||||||||||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|5102raeY|ytiuqe'srenwolatoT|||25.015,709,71|||||25.015,709,71|67.702,099,832|60.134,039,042|||||||||||||||||||03.322,049,1-|82.817,798,652|
||ytiuqeytironiM|||19.313,685|||||19.313,685|68.813,591|68.813,591||||||||||||||||||||77.236,187|
||ynapmoctnerapehtfosrenwootelbatubirttaytiuqE|detubirtsidnUstiforp||89.021,552,881,1-|||||89.021,552,881,1-|02.211,537,042|02.211,537,042||||||||||||||||||||87.800,025,749-|
|||ksirsevreserlareneG||||||||||||||||||||||||||||||
|||sevresersulpruS||00.000,686,521|||||00.000,686,521||||||||||||||||||||||00.000,686,521|
|||sevreserlaicepS||||||||||||||||||||||||||||||
|||evisneherpmocrehtO emocni||00.008,9|||||00.008,9||||||||||||||||||||||00.008,9|
|||kcotsyrusaert:sseL||||||||||||||||||||||||||||||
|||sevreserlatipaC||95.715,505,069|||||95.715,505,069|03.322,049,1-||||||||||||||||||||03.322,049,1-|92.492,565,859|
|||stnemurtsniytiuqerehtO|srehtO|||||||||||||||||||||||||||||
||||dnoblautepreP|||||||||||||||||||||||||||||
||||serahsderreferP|||||||||||||||||||||||||||||
|||latipacerahS||00.000,573,911|||||00.000,573,911||||||||||||||||||||||00.000,573,911|
|metI||||raeytsalfo13rebmeceDtasaecnalaB.Ⅰ|seicilopgnitnuoccanisegnahcrofstnemtsujda:sulP|raeyroirpnisrorregnitnuoccafonoitcerrocrofstnemtsujdA|lortnocnommocrednuseititnegnivlovninoitanibmocssenisuB|srehtO|raeytnerrucehtfo1yraunaJtasaecnalaB.Ⅱ|)sessolrof"-"(raeytnerrucehtrof)esaerced(/esaercnI.Ⅲ|semocnievisneherpmoclatoT.1|srenwoybdecuderrodetubirtnoclatipaC.2|sredloherahsmorfserahsnommoC)1(|stnemurtsniytiuqerehtofosredlohehtmorflatipactnemtsevnI)2(|ytiuqe'srenwoehtnidedulcnitnemyapdesab-erahsehtfotnuomA)3(|srehtO)4(|stiforpfonoitubirtsiD.3|sevresersulprusfolawardhtiW)1(|evreserksirlarenegfolawardhtiW)2(|sredloherahsrosrenwootnoitubirtsiD)3(|srehtO)4(|ytiuqe'srenwofodrawrof-yrraclanretnI.4|latipacni-diapotnisevreserlatipacfonoisrevnoC)1(|latipacni-diapotnisevresersulprusfonoisrevnoC)2(|sessolgnittesffosevresersulpruS)3(|srehtO)4(|sevreserlaicepS.5|raeytnerrucehtninwardhtiwtnuomA)1(|raeytnerrucehtnidesutnuomA)2(|srehtO.6|raeytnerrucehtfoecnalabgnidnE.Ⅳ|

||||||||||||||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|6102raeY|'srenwoytiuqelatoT||03.528,284,881||||03.528,284,881|93.208,671,1-|93.208,671,1-|||||||||||||||||||19.220,603,781|
||detubirtsidnUstiforp||99.862,351,510,1-||||99.862,351,510,1-|93.208,671,1-|93.208,671,1-|||||||||||||||||||83.170,033,610,1-|
||sevresersulpruS||00.000,686,521||||00.000,686,521|||||||||||||||||||||00.000,686,521|
||sevreserlaicepS||||||||||||||||||||||||||||
||evisneherpmocrehtO emocni||00.008,9||||00.008,9|||||||||||||||||||||00.008,9|
||kcotsyrusaert:sseL||||||||||||||||||||||||||||
||sevreserlatipaC||92.492,565,859||||92.492,565,859|||||||||||||||||||||92.492,565,859|
||stnemurtsniytiuqerehtO|srehtO|||||||||||||||||||||||||||
|||dnoblautepreP|||||||||||||||||||||||||||
|||serahsderreferP|||||||||||||||||||||||||||
||latipacerahS||00.000,573,911||||00.000,573,911|||||||||||||||||||||00.000,573,911|
|metI|||raeytsalfo13rebmeceDtasaecnalaB.Ⅰ|seicilopgnitnuoccanisegnahcrofstnemtsujda:sulP|raeyroirpnisrorregnitnuoccafonoitcerrocrofstnemtsujdA|srehtO|raeytnerrucehtfo1yraunaJtasaecnalaB.Ⅱ|)sessolrof"-"(raeytnerrucehtrof)esaerced(/esaercnI.Ⅲ|semocnievisneherpmoclatoT.1|srenwoybdecuderrodetubirtnoclatipaC.2|sredloherahsmorfserahsnommoC)1(|stnemurtsniytiuqerehtofosredlohehtmorflatipactnemtsevnI)2(|ytiuqe'srenwoehtnidedulcnitnemyapdesab-erahsehtfotnuomA)3(|srehtO)4(|stiforpfonoitubirtsiD.3|sevresersulprusfolawardhtiW)1(|sredloherahsrosrenwootnoitubirtsiD)2(|srehtO)3(|ytiuqe'srenwofodrawrof-yrraclanretnI.4|latipacni-diapotnisevreserlatipacfonoisrevnoC)1(|latipacni-diapotnisevresersulprusfonoisrevnoC)2(|sessolgnittesffosevresersulpruS)3(|srehtO)4(|sevreserlaicepS.5|raeytnerrucehtninwardhtiwtnuomA)1(|raeytnerrucehtnidesutnuomA)2(|srehtO.6|raeytnerrucehtfoecnalabgnidnE.Ⅳ|

||||||||||||||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|5102raeY|'srenwoytiuqelatoT||21.157,266,681||||21.157,266,681|81.470,028,1|81.470,028,1|||||||||||||||||||03.528,284,881|
||detubirtsidnUstiforp||71.343,379,610,1-||||71.343,379,610,1-|81.470,028,1|81.470,028,1|||||||||||||||||||99.862,351,510,1-|
||sevresersulpruS||00.000,686,521||||00.000,686,521|||||||||||||||||||||00.000,686,521|
||sevreserlaicepS||||||||||||||||||||||||||||
||evisneherpmocrehtO emocni||00.008,9||||00.008,9|||||||||||||||||||||00.008,9|
||kcotsyrusaert:sseL||||||||||||||||||||||||||||
||sevreserlatipaC||92.492,565,859||||92.492,565,859|||||||||||||||||||||92.492,565,859|
||stnemurtsniytiuqerehtO|srehtO|||||||||||||||||||||||||||
|||dnoblautepreP|||||||||||||||||||||||||||
|||serahsderreferP|||||||||||||||||||||||||||
||latipacerahS||00.000,573,911||||00.000,573,911|||||||||||||||||||||00.000,573,911|
|metI|||raeytsalfo13rebmeceDtasaecnalaB.Ⅰ|seicilopgnitnuoccanisegnahcrofstnemtsujda:sulP|raeyroirpnisrorregnitnuoccafonoitcerrocrofstnemtsujdA|srehtO|raeytnerrucehtfo1yraunaJtasaecnalaB.Ⅱ|)sessolrof"-"(raeytnerrucehtrof)esaerced(/esaercnI.Ⅲ|semocnievisneherpmoclatoT.1|srenwoybdecuderrodetubirtnoclatipaC.2|sredloherahsmorfserahsnommoC)1(|stnemurtsniytiuqerehtofosredlohehtmorflatipactnemtsevnI)2(|ytiuqe'srenwoehtnidedulcnitnemyapdesab-erahsehtfotnuomA)3(|srehtO)4(|stiforpfonoitubirtsiD.3|sevresersulprusfolawardhtiW)1(|sredloherahsrosrenwootnoitubirtsiD)2(|srehtO)3(|ytiuqe'srenwofodrawrof-yrraclanretnI.4|latipacni-diapotnisevreserlatipacfonoisrevnoC)1(|latipacni-diapotnisevresersulprusfonoisrevnoC)2(|sessolgnittesffosevresersulpruS)3(|srehtO)4(|sevreserlaicepS.5|raeytnerrucehtninwardhtiwtnuomA)1(|raeytnerrucehtnidesutnuomA)2(|srehtO.6|raeytnerrucehtfoecnalabgnidnE.Ⅳ|

CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(Amounts are expressed in RMB unless otherwise stated)
1 Corporate information
1.1 Company profile
Chongqing Jianshe Motorcycle Co., Ltd. (hereinafter referred to as the "Company", "Company" or "Chongqing Jianshe Motorcycle ") was jointly set up in July 1995 by the Construction Industry (Group) Co., Ltd. and China North Industries Shenzhen Corporation. The Business License of the Enterprise: No. 915000007474824231. The Company was listed in July 1995 at the Shenzhen Stock Exchange. The Company is engaged in the manufacturing industry.
As at December 31, 2016, the Company issued 119,375,000 shares in total and had the registered capital of 119,375,000. The registration place: NO.1, JIANSHE ROAD HUAXI INDUSTRY PARK, BANAN DISTRICT, CHONGQING; the headquarters address: Banan District, Chongqing Municipality. Legal representative: Lv Hongxian. The main business activities: research and development, processing, manufacturing and related technical services of Motorcycles, auto parts, accessories, machinery products, design , manufacturing and related technical services of tooling (except for those subject to national special provisions) ; R& D, production and sales of motorcycle engines; research , development and processing of mechanical and electrical products, home appliances, bicycles, environmental protection product; imports, wholesale, retail, commission agency (except auction) of similar products of these products. The parent company is Chongqing Jianshe mechanical and electrical co., LTD.. The actual controller of the Company is China South Industries Group Corporation(CSGS), and the ultimate controller of the Company is the State-owned Assets Supervision and Administration Commission (SASAC).
The disclosure of the financial statements was approved by the Board of Directors on April 25,2017.
1.2 Scope of the consolidated financial statements
As at December 31, 2016, the subsidiaries included in the scope of consolidated financial statements of the Company are presented as set out below:
Name of the subsidiary
Notes to the Financial Statements Page 1
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
Chongqing Jianshe Automobile A/C Co., Ltd.
Shanghai Jianshe Motorcycle Co., Ltd.
See "Note 6 Change in the scope of business combinations "and "Note 7 Equity in other entities " for details of scope consolidated financial statements and the change therein.
2 Basis of preparation for financial statements
2.1 Basis of preparation
The Company prepares the financial statements on the basis of going concern, according to actual transactions and events, and in accordance with the Accounting Standards for Business Enterprises– Basic Standards and 38 concrete accounting standards issued by the Ministry of Finance on February 15, 2006, the subsequently issued Accounting Standards for Business Enterprises– Application Guidelines, and the Accounting Standards for Business Enterprises– Interpretations and other relevant provisions (hereinafter collectively referred to as―Accounting Standards for BusinessEnterprises‖), as well as Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reports issued by China Securities Regulatory Commission.
2.2 Going concern
The Company was on a going concern basis in 12 months as of the end of the current reporting period and was not affected by any material event having impact on the going concern.
3 Principal accounting policies and accounting estimates
Specific accounting policies and accounting estimates:
The disclosure as set out below cover the specific accounting policies and accounting estimates developed by the Company in accordance with the actual production and management features. See "Note 3.11 Provision for bad debts of accounts receivables, "Note 3.12 Inventories", "Note 3.16 Fixed assets", "Note 3.19 Intangible assets" and "3.25 Revenues" for details.
3.1 Statements on Compliance with Accounting Standards for Business Enterprises
The financial statements prepared by the Company meet the requirements of the Accounting Standards for Business Enterprises and truly and completely reflect theCompany’s financial position, operating results and cash flows, etc. for the reporting period.
3.2 Accounting period
Notes to the Financial Statements Page 2
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
The accounting year is from January 1 to December 31.
3.3 Operating cycle
The Company has an operating cycle of 12 months.
3.4 Functional currency
The functional currency is Renminbi.
3.5 Accounting treatments of the combination of enterprises under common control and the combination of enterprises not under the common control
Business combination under common control: The assets and liabilities acquired by the Company in a business combination are stated at the book value of the assets and liabilities (including the goodwill arising from the acquisition of the acquiree by the ultimate controller) of the acquiree on the combination date. The stock premium in the capital reserve is adjusted according to the difference between the book value of net assets acquired through combination and the book value of consideration paid for the combination (or total par value of shares issued). If the stock premium in the capital reserves is insufficient to cover the difference, the remaining amount shall be charged against retained earnings.
Combination of enterprises not under the common control: The assets paid and liabilities incurred or assumed by the Company on the acquisition date for the business combination are measured at their fair values, and the difference between the fair value and book value is charged to the current profit or loss. The Company shall recognize the difference of the combination costs in excess of the fair value of the identifiable net assets acquired from the acquiree as goodwill. The difference of the combination costs in short of the fair value of the identifiable net assets acquired from the acquiree is charged to the current profit and loss after review.
The intermediary service charges incurred for audit, legal service, consulting services and other direct relevant expenses are charged to the current profit and loss; the transaction costs incurred for issuance of equity securities for business combination offest the equities.
3.6 Preparation of consolidated financial statements
3.6.1 Scope of consolidation
The scope of consolidated financial statements is determined on the basis of control, and
Notes to the Financial Statements Page 3
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
all subsidiaries (including the divisable portion of the investee under the control of the Company) are included in the consolidated financial statements.
3.6.2 Combination procedures
The Company prepares the consolidated financial statements on the basis of the financial statements of itself and its subsidiaries, according to other relevant information. When preparing the consolidated financial statements, the Company regards the whole group as an accounting entity to reflect the overall financial position, operating results and cash flow of the Group, in accordance with requirements of relevant accounting standards for the recognition, measurement and presentation, on the basis of the uniform accounting policies.
The accounting polidies and accounting period adopted by the subsidiaries included in the scope of consolidated financial statements are in line with those adopted by the Company. In case any disrepancy between the accounting policies and accounting period adopted by the subsidiary and those adopted by the Company, the adjustment will be made in light of the accounting policies and accounting period adopted by the Company, when the consolidated financial statements are prepared.The financial statements of the subsidiary acquired through the combination of enterprises not under common control are adjusted on the basis of the fair value of the identifiable net assts on the acquisition date. The financial assets of the subsidiary acquired through the combination of enterprises under the common control are adjusted on the basis of the book value of the assets and liabilities (including the goodwill arising from the acquisition of such subsidiary by the ultimate controller) as stated in the financial statements of the ultimate controller.
The owners' equities, current net profit or loss and current comprehensive income attributable to minority shareholders are separately presented under the owners' equities item of the consolidated balance sheet, net profit item and total comprehensive income item of the consolidated income statement, respectively. Where the current losses attributable to minority shareholders of the subsidiary exceed the owners' equities attributable to the same at the period beginning, the difference between them will offset the minority equity.
(1) Increase of the subsidiary or business
Notes to the Financial Statements Page 4
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
In case of increase of subsidiary or business as a result of combination of enterprises under common control during the reporting period, the beginning amount stated in the consolidated balance sheet will be adjusted; the income, expense and profit generated from the subsidiary or business from the beginning of the period of combination to the end of reporting period will be included in the consolidated statement of cash flows, with the adjustment made to the relevant items of the comparative statement, as if the reporting entity after the combination still existed from the beginning of control of the ultimate controller.
Where the additional investment or other reason leads to the control over the investee under the common control, all entities considered to take a part in the combination will be adjusted to the extent that they are in the current status as they come to be under the control of the ultimate controller. The retained earnings or the current profit or loss at the period beginning during the statement period are offset by equity investment held before the control over the mergee is obtained, and the equity investments held before the control over the acquiree is obtained, and the related profit or loss, other comprehensive income and change in other net assets that are recognized during the period which starts on the later of the date when the original equities are obtained and the date when both merger and mergee are under the common control and ends on the combination date, respectively.
In case of increase of subsidiary or business during the reporting period as a result of combination of enterprises not under the common control, the beginning amount stated in the consolidated balance sheet will not be adjusted; the income, expense and profit generated from such subsidiary or business from the acquisition date to the end of reporting period will be included in the consolidated income statement; and the cash flow generated from such subsidiary or business from the acquisition date to the end of reporting period will be incldued in the consolidated statement of cash flows.
Where the additional investment or other reason leads to the control over the investee not under the common control, the equities of the mergee held before the acquisition date will be remeasured at the fair value of such equities on the acquisition date, and the difference between the fair value and book value thereof
will be charged to the current investment income. Where the equities of the
Notes to the Financial Statements Page 5
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
acquiree held before the acquisition date involves the change in other comprehensive income or in other owners' equities other than the net profit or loss, other comprehensive income and profit distribution, the change in other comprehensive income or other owners' equities will be converted into tthe investment income for the period covering the acquisition date, except for the other comprehensive income arising from the change on remeasurement of the net liabilities or net assets under the defined benefit plan by the investee.
(2) Disposal of the subsidiary or business
a. General method of treatment
In case of treatment of subsidiary or business during the reporting, the the income, expense and profit generated from such subsidiary or business from the period beginning to the disposal date will be included in the consolidated income statement; and the cash flow generated from such subsidiary or business from the period beginning to the disposal date will be incldued in the consolidated statement of cash flows.
Where the control over the investee is lost due to the disposal of some of equity investments or other reasons, the remaining equity investment after disposal will be re-measured at fair value on the day when the control is lost.The sum of the consideration received for disposal of equities and the fair value of the remaining equities, less the difference between the net assets of the former subsidiary of which the continuous calculation starts from the acquisition date or combination date and the goodwill, should be charged to the investment income for the period during which the control is lost.Changes in other comprehensive income related to the equity investment in the former subsidiary or in owners' equities other than the net profit or loss, other comprehensive income and profit distribution are converted into the current investment income upon the loss of control, except for the other comprehensive income arising from the change on remeasurement of the net liabilities or net assets under the defined benefit plan by the investee.
In the event that the proportion of the Company's shares is reduced due to the capital increase of the other investors, the accounting treatment shall be carried
out in accordance with the above principles.
Notes to the Financial Statements Page 6
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
b. Disposal of subsidiary by stages
In case of disposal of investment in the equity of subsidiary by stages through a number of transactions, such transactions will be treated as a package deal, provided that the terms and conditions on and the economic effect of the equity investment in the subsidiary meet one of more of the following conditions:ⅰ. These transactions are entered into considering their effects are considered;
ⅱ. These transactions can lead to a complete business result as a whole;ⅲ. The occurrence of a transaction depends on the occurrence of at least one of others; and
ⅳ. A single transaction is deemed uneconomical, but the economical efficiency can be seen when it is put together with other transactions; Where the transctions involved in the disposal of the equity investment in the subsidiary are package deals, the Company will treat each transaction as the one involved in the disposal of the subsidiary with loss of control; however, the difference between the consideration for each disposal before the loss of control and the net assets of such subsidiary corresponding to the disposal of investment will be recognized as other comprehensive income in the consolidated financial statements, and will be transferred to the loss or profit for the period during which the control is lost, upon the loss of control.
Where the transctions involved in the disposal of the equity investment in the subsidiary are not package deals, these transactions will be treated according to the policies on the disposal of part of the equity investments in the subsidiary without loss of control, before the loss of control; or treated in the general treatment method of disposa of subsidiary, upon the loss of control.
(3) Acquisition of minority equity of subsidiary
The stock premium under the capital reserve in the consolidated balance sheet is adjusted at the difference between the long-term equity investment newly acquired
as a result of acquisition of minority equity and the net assets of the subsidiary
Notes to the Financial Statements Page 7
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
attributable to the Company, of which the continuous calculation starts from the acquisition date (or combination date); and the retained earnings will be adjusted if the stock premium under the capital reserve is insufficient as to the offset.
(4) Disposal of part of the equity investments in the subsidiary without loss of control The stock premium under the capital reserve in the consolidated balance sheet is adjusted at the difference between the consideration received for the disposal of part of the long-term equity investments in the subsidiary without loss of control and the net assets of the subsidiary attributable to the Company, of which the continuous calculation starts from the acquisition date (or combination date); and the retained earnings will be adjusted if the stock premium under the capital reserve is insufficient as to the offset.
3.7 Classification and accounting treatment of joint venture arrangement
Joint venture arrangement is classified into joint operation and joint ventures.
In terms of the joint operation, the Company is the joint venturer under the joint venture arrangement and is entitled to the assets and bear the liabilities under such arrangement.
The Company recognizes the following items in relation with the share of interest in the joint operation, and conducts the accounting treatment of the the said items according to the provisions of Accounting Standards for Enterprises:
(1) Recognition of the assets held separately by the Company and of the assets held by the Company jointly others in proportion;
(2) Recognition of the liabilities separately borne by the Company and of the liabilities borne by the Company jointly others in proportion;
(3) Recognition of proportioned income generated attributable to the Company as one of the co-operators;
(4) Recognition of income generated fattributible to the Company as one of the co-sellers; (5) Recognition of the expenses incurred separately and the proportioned expenses incurred by the Company as one of the co-opeartors.
See "Note 3.14 Long-term equity investments" for detailed of accounting policies on the
Notes to the Financial Statements Page 8
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
investment of the Company in joint ventures.
3.8 Recognition criteria of cash and cash equivalents
For the purpose of preparing the statement of cash flows, the term―cash‖ refers to cash on hand and deposits of that are readily available for payment. And the term―cashequivalents‖ refers to short-term (maturing within three months from acquisition) and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
3.9 Foreign currency business and foreign currency translation
3.9.1 Foreign currency business:
Transactions denominated in foreign currency are translated into RMB for accounting purpose at the spot exchange rate on the day when the transaction occurs.
The balances of foreign currency monetary items are converted at the spot exchange rate prevailing on the balance sheet date. The exchange differences arising from the conversion, other than those arising from specific-purpose borrowings in foreign currencies related to acquisition and construction of assets eligible for capitalization, which shall be measured in accordance with principle of capitalization of the borrowing costs, shall be charged to the current profit or loss.
3.9.2 Translation of financial statement denominated in foreign currency
The asset and liability items in the balance sheet shall be converted at the spot exchange rates prevailing on the balance sheet date. Except retained profit, theowners’ equity items shall be converted at the spot exchange rates on the occurrence date.The income and expense items in the income statement shall be converted at the spot exchange rates which are determined by systematic and reasonable methods and similar to the spot exchange rate on the date of occurrence of transaction.
On disposal of a foreign operation, the difference arising from the converstion of financial statements denominated in foreign currency and related to such foreign operation should be transferred to the current gain or loss on disposal, from the owners' equities.
3.10 Financial instruments
Notes to the Financial Statements Page 9
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
Financial instruments include financial assets, financial liabilities and equity instruments. 3.10.1 Classification of financial instruments
Upon the initial recognition, fFinancial assets and liabilities are classified into the following categories according to the purpose of acquisition: the financial assets or financial liabilities measured at fair value through current profit and loss, including financial assets or financial liabilities held for trading (and those financial assets or financial liabilities directly designated under this category), held-to-maturity investments, receivables, financial assets available for sale and other financial liabilities, etc.
3.10.2 Recognition and measurement of financial instruments
(1) Financial assets (financial liabilities) measured at fair value through current profit and loss
Financial assets (financial liabilities) are initially stated at fair values when acquired (deducting cash dividends that have been declared but not distributed and bond interests that have matured but not been drawn), and relevant transaction expenses are included in the current profit and loss.
The interests or cash dividends to be received during the holding period are recognized as investment income. Change in fair values is included in the current profit and loss at the end of the period.
Upon the disposal, the difference between the fair value and initial book-entry value is recognized as investment income upon disposal; meanwhile, adjustment is made to gains or losses from changes in fair values.
(2) Held-to-maturity investments
Held-to-maturity investments are initially recorded at fair values when acquired (deducting cash dividends that have been declared but not distributed and bond interests that have matured but not been drawn).
The interest income is calculated and recognized at amortized cost and effective interest rates (or the nominal interest rate, if there is small difference between the effective interest rate and the nominal interest rate) and is charged to the investment income. The effective interest rates are determined upon acquisition and remain
unchanged during the expected remaining period, or a shorter period if applicable.
Notes to the Financial Statements Page 10
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
Difference between the proceeds and the book value of the investment is recognized as investment income upon disposal.
(3) Accounts receivable
Forcreditor’s rights receivable arising from external selling commodities or providing service by the Company and other creditor's rights in respect of liability instruments of other enterprises (excluding those quoted in an active market) held by the Company, including accounts receivable, other receivables, notes receivables, prepayments, long-term receivables etc., the initial recognition amount shall be the contract price or agreed price receivable due from purchasing party. The initial amount of the accounts receivable with financing nature are recognized based on the present value.
The difference between the amount obtained and the book value of the accounts receivable is included in current profit and loss upon recovery or disposal.
(4) Available-for-sale financial assets
Available-for-sale financial assets are initially recorded at the sum of fair values (deducting cash dividends that have been declared but not distributed and bond interests that have matured but not been drawn) and transaction costs when acquired.
The interests or cash dividends to be received during the holding period are recognized as investment income. Available-for-sale financial assets are measured at fair value at the end of the period, and changes in fair value are included in the capital reserves (other capital reserves). those equity instrument investments not quoted in an active market and whose fair value cannot be reliably measured, and the derivative financial assets linked to and settled by way of delivery of such equity investments are measured at the cost.
Difference between the proceeds and the book value of the financial assets is recognized as gain or loss on investment upon disposal; meanwhile, amount of disposal corresponding to the accumulated change in fair value which is originally
and directly included in theowners’ equity shall be transferred out and charged to
Notes to the Financial Statements Page 11
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
the current gains or losses.
(5) Other financial liabilities
Other financial liabilities are initially recognized at the sum of fair value and transaction expenses. The subsequent measurement is based on amortized costs. They are subsequently measured at amortized cost.
3.10.3 Recognition and measurement for transfer of financial assets
If the Company has transferred nearly all of the risks and rewards relating to the ownership of the financial assets to the transferee, they shall be derecognized. If it retains nearly all of the risks and rewards relating to the ownership of the financial assets, they shall not be derecognized.
In judging whether the transfer of a financial asset meets the above requirements of derecognizing financial assets, the principle of substance over form is adopted. The Company divides the transfer of a financial asset into entire financial asset transfer and partial transfer. As for the entire financial asset transfer which is qualified for derecognition, the difference between the following two amounts is recognized in the current profit and loss: The Company divides the transfer of a financial asset into entire financial asset transfer and partial transfer. As for the entire financial asset transfer which is eligible for derecognition, the difference between the following two amounts is recognized in the current profit and loss:
i) Book value of the transferred financial assets;
ii) Sum of the price received from the transfer with the cumulative change in the amount of fair value directly recorded in the originalowners’ equity (involving the case when the transferred financial assets are those available for sale).
As for the partial financial assets transfer which are eligible for derecognition, the whole book value of the transferred financial assets should be apportioned in accordance with their respective relative fair value between the derecognized parts and the recognized parts; and the difference between the following two amounts is recognized in the current profit and loss:
(i) book value of the derecognized parts;
Notes to the Financial Statements Page 12
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
ii) sum of the consideration received from the derecognized parts with the amount of the derecognized parts corresponding to the cumulative changes in the amount of fair value directly included in the originalowners’ equity (involving the case when the transferred financial assets are those available for sale).
If the transfer of financial assets does not satisfy requirements for derecognition, the financial assets shall continue to be recognized, and the consideration received will be recognized as financial liabilities.
3.10.4 Conditions for derecognition of financial liabilities
Financial liabilities shall be entirely or partially derecognized if the present obligations derived from them are entirely or partially discharged. Where the Company enters into an agreement with a creditor so as to substitute the current financial liabilities with new ones, and the contract clauses of which are substantially different from those of the current ones, it shall recognize the new financial liabilities in place of the current ones. If material amendments have been made to all or part of contract terms of current financial liabilities, all or part of current financial liabilities are derecognized, and the financial liabilities with amended terms are recognized as new financial liabilities. Upon entire or partial derecognition of financial liabilities, differences between the carrying amounts of the derecognized financial liabilities and the consideration paid (including non-monetary assets surrendered or new financial liabilities assumed) are charged to profit or loss for the current period.
If the Company repurchases part of financial liabilities, it shall distribute, on the repurchase day, the whole book value of the financial liabilities in accordance with the relatively fair value between the part to be recognized continuously and the part to be derecognized. The balance between the book value distributed to the part which has been derecognized and the consideration paid to it (including non-cash assets which have been transferred out or the new financial liabilities it assumed), shall be included in current profit and loss.
3.10.5 Recognition of fair values of financial assets and financial liabilities
Notes to the Financial Statements Page 13
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
The fair value of the financial instrument with an active market is determined based on the quotation in the active market. The fair value of the financial instrument without an active market is determined using valuation techniques. In terms of the estimation, the estimation technology which is applicable in the current circumstance and supported by enough available data and other information is adopted and the input value which is similar to the features of assets and liabilities and taken into account of by the market participants in the transaction of relevant assets or liabilities are selected by the Company, which give priority in use of the relevant observable value. The unobservable value is used only when the relevant observable value cannot be obtained or is impracticable.
3.10.6 Testing and accounting treatment of financial assets (excluding accounts receivable) Except for the financial assets measured at fair values through current profit and loss, the book value of financial assets on the balance sheet date should be checked. If there is objective evidence that a financial asset is impaired, provision for impairment shall be made.
(1) Provision for impairment of available-for-sale financial assets:
If the fair values of available-for-sale financial assets have significantly declined at the period end, or it is expected that the trend of decreases in values is non-temporary after consideration of all the relevant factors, impairment shall be recognized, and the accmulated loss on decreases in fair values previously charged directly to capital reserves are reversed and recognized as impairment loss.
For available-for-sale debt instruments whose impairment losses have been recognized, if their fair values rise in the subsequent accounting period and such rise is objectively related to the matters occurring after the recognition of impairment loss, the previously recognized impairment loss shall be reversed and recorded into the current profit and loss.
Impairment losses on available-for-sale equity instruments shall not be reversed through profit or loss.
(2) Provision for impairment of held-to- maturity investments:
Measurement of provisions for impairment loss on held-to-maturity investments is
similar to that applicable to provisions for impairment loss on receivables.
Notes to the Financial Statements Page 14
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
3.11 Provision for bad debt of accounts receivable
3.11.1 Significant accounts receivable with individual provision for bad debt:
Assessment basis or standard of individually significant amount: Accounts receivable have an individual amount of more than RMB5 million, and other receivables have an individual amount of RMB3 million.
Individual provision for bad debt of significant accounts receivable:
The seprate impairment tests are carried out for the accounts receivable. Provision for bad debts shall be made at the difference of present values of estimated future cash flows in short of their book values and included in current profit and loss, if any objective evidence indicates the impairment. The unimpaired accounts receivable as shown by the separate test result are put into the relevant portfolio for provision for bad debt.
3.11.2 Accounts receivable with provision for bad debts accrued by credit risk features portfolio:
Method of bad-debt provision made in terms of the credit risk features portfolio Accounts receivable without provision for
bad debt Aging analysis method
Bad-debt provision made under the aging analysis method in the portfolio:
||
|-|
|Proportion of provision foraccounts receivable (%)|
|0|
|5|
|10|
|30|
|50|
|80|
|100|

 3.11.3 Insignificant accounts receivable with individual provision for bad debt
Reasons for individual provision for bad debts: If there is any clear evidence indicating
that the receivables cannot or are unlikely to be recovered, for example, the bankruptcy,
insolvency, insufficient cash flow of the debtor, or the insolvency in a short time due to
Notes to the Financial Statements Page 15
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
the production halt resulting from the severe natural disaster, or the accounts receivable may be exposed to risk as indicated by other evidence, the individual provision for bad debt will be made.
Method of provision for bad debt: The provision for bad debt is individually recognized at the difference between the book value and the present value of estimated future cash flow.
Note: No provision is made for the bad debts of the current account of transactions with related parties.
3.12 Inventories
3.12.1 Classification of inventories
Inventories are classified into: raw materials, consigned processing materials, low-cost consumables, packaging materials, stock commodities, goods in progress, semi-finished goods, finished goods, etc.
3.12.2 Valuation of dispatched inventories
The inventories dispatched are measured by weighted average method.
3.12.3 Basis for determination of net realizable value of different categories of inventories Net realizable values of merchandise inventories held directly for sale, such as finished goods, merchandise inventories, and available-for-sale materials, are measured at the estimated selling prices less estimated sales expenses and relevant taxes and surcharges in the normal production process. Net realizable values of material inventories which need further processing are measured at the estimated selling prices less the estimated costs of completion, estimated sales expenses and relevant taxes and surcharges in the normal production process. Net realizable values of inventories held for the purpose of fulfillment of sales contracts or service contracts should be calculated on the basis of the contract prices; if the quantity of inventories held exceeds that stated in the contract, the net realizable values of the excessive part should be calculated on the basis of normal selling prices.
The Company shall make provisions for impairment loss on diminution in value of
inventories on an individual basis at the year end. For inventories with large quantities
Notes to the Financial Statements Page 16
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
and relatively low unit prices, the provisions for loss on diminution in value of inventories shall be made on a category basis. For the inventories related to the product portfolios manufactured and sold in the same area, and of which the final usage or purpose is identical or similar thereto, and which is difficult to separate from other items for measurement purposes, the provisions for impairment loss on diminution in value of inventories may be made on a portfolio basis.
The net realizable value of inventory items is determined based on the market price on the balance sheet date, unless there is clear evidence that the market price is abnormal on the balance sheet date.
The net realizable value of inventory items as at the end of the period is determined based on the market price on the balance sheet date.
3.12.4 Inventory system
The perpetual inventory system is adopted.
3.12.5 Amortization of low-cost consumables and packaging materials
(1) Low-cost consumables are amortized under the lump-sum method;
(2) Packing materials are amortized under the lump-sum method.
3.13 Assets classified as held-for-sale assets
The component (or non-current asset) will be recognized as the thing held for sale, if all the following conditions are met at the same time:
(1) Such component can be sold as it is, in accordance with the usual terms on its sales; (2) The Company has been an integral part of the disposal of the (non-current assets) made a resolution, such as the need to obtain the required shareholder approval, has the approval of the shareholders' meeting or the appropriate authority;
(3) The Company has signed an irrevocable transfer agreement with the transferee;
(4) Such transfer will be completed within one year.
Notes to the Financial Statements Page 17
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
3.14 Long-term equity investment
3.14.1 Judgment criteria of joint control or effect of material impact
Common control refers to the control shared over an arrangement in accordance with the relevant stipulations, and the decision-making of related activities of the arrangement should not be made before the party sharing the control right agrees the same. Where the Company exercises common control over the investee together with other parties to the joint venture and enjoys the right on the investee's net assets, the investee is a joint venture of the Company.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those polices. Where the Company has significant influences on an investee, the investee shall be an associate of the Company.
3.14.2 Determination of initial investment cost
(1) Long-term equity investment acquired from business combination
For business combination under common control: If the Company makes payment in cash, transfers non-cash assets or bears debts and issues equity securities as the consideration for the business combination, the share of owners' equity of the acquiree obtained on the combination date in the book value of the ultimate controller's consolidated financial statement is recognized as the initial cost of the long-term equity investment. Where additional investment or other reasons make the control over the investee under the same control possible, the initial investment cost of the long-term equity investments is measured at the share of net assets of the acquiree on the combination date in the book value of the ultimate controller's consolidated financial statements. The stock premium is adjusted according to the difference between the initial cost of long-term equity investments on the combination date and the sum of the book value of long-term equity investments before combination and the book value of the consideration further paid for obtaining shares; if there is no sufficient share premium for write-downs, the retained earnings are offset.
For business combination not under common control: the Company recognizes the combination cost determined on the combination date as the initial cost of
long-term equity investment. Where additional investment, or other reasons make
Notes to the Financial Statements Page 18
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
the control over the investee not under the same control possible, the initial investment cost under the cost method will be the sum of the book value of the equity investments previously held and the newly increased investment costs. (2) Long-term equity investment acquired by other means
The initial costs of a long-term equity investments obtained by payments of cash shall be the purchase prices actually paid.
The initial costs of long-term equity investments in equity securities shall be stated at their fair values.
If the exchange of non-monetary assets has commercial substance and the fair values of assets traded out and traded in can be measured reliably, the initial cost of long-term equity investment traded in with non-monetary assets are determined based on the fair values of the assets traded out unless there is any conclusive evidence that the fair values of the assets traded in are more reliable; if the exchange of non-monetary assets does not meet the above criteria, the book value of the assets traded out and the relevant taxes and surcharges payable are recognized as the initial cost of long-term equity investment traded in.
The initial costs of long-term equity investments arising from debt restructuring shall be stated at their fair values.
3.14.3 Subsequent measurement and recognition of profit or loss
(1) Long-term equity investment calculated under the cost method
The Company applies cost method to account for the long-term equity investments of subsidiaries. Except for the price actually paid upon acquisition or the cash dividends or profit included in the price that are declared but not yet paid, the Company recognizes investment income for the current period at the share of the cash dividends or profits declared and released by the investee.
(2) Long-term equity investment calculated under the equity method
Long-term equity investments in associates and in joint ventures are accounted for under the equity method. If the cost of initial investment is in excess of the
proportion of the fair value of the net identifiable assets in the investee when the
Notes to the Financial Statements Page 19
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
investment is made, the difference will not be adjusted to the initial cost of long-term equity investment; if the cost of initial investment is in short of the proportion of the fair value of the net identifiable assets in the investee when the investment is made, the difference will be included in the current profit and loss. The Company recognizes the investment income and other comprehensive income according to the net gain or loss and other comprehensive income of the investee attributable to the Company, and adjusts the book value of long-term equity investment; reduces the book value of long-term equity investments according to the profit or cash dividends declared by the investee and attributable to the Company; and adjusts the book value of the long-term equity investments in the investee, as to the change in owners' equities other than the net gain or loss, other comprehensive income and profit distribution of the investee, and charges the same to the owners' equities.
When the share in net profit and loss of the investee is recognized, the fair value of the identifiable net assets of the investee when the investment is obtained shall be taken as a basis and the share will be determined after the net profit is adjusted in accordance with the Company's accounting policies and accounting periods. During the period of holding the investment, if the investee is capable of providing consolidated financial statements, the profit or loss shall be measured based on the net profit and other changes in equity recorded in the consolidated financial statements.
The profit and loss of the internal transactions that are not realized arising among the Company, affiliated enterprises, and joint ventures will be offset at the part attributable to the Company and the investment income will be recognized on that basis. For internal trading losses that have not occurred with the investee, they will be fully recognized if they belong to the asset impairment losses. The trading of assets between the Company and its associates or joint ventures, which constitutes business, are treated according to the policies disclosed in "Note 3.5 Accounting Treatment of Combination of enterprises under common control and enterprises not under common control" and "Note 3.6 Preparation of consolidated financial statements".
Notes to the Financial Statements Page 20
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
When the Company confirms that it should share losses of the investee, treatment shall be done in following sequence: Firstly, the book value of the long-term equity investment shall be reduced. Secondly, where the book value is insufficient to cover the share of losses, investment losses are recognized to the extent of book value of other long-term equity which form net investment in the investee in substance and the book value of long term receivables shall be reduced. finally, after all the above treatments, if the Company is still responsible for any additional liabilities in accordance with the provisions stipulated in the investment contracts or agreements, estimated liabilities are recognized and included into current investment loss according to the obligations estimated to undertake.
(3) Disposal of long-term equity investment
Upon disposal, the difference between the book value and the price obtained is recognized in current profit and loss.
Disposal of long-term equity investments accounted for under the equity method, which is previously charged to other comprehensive income is treated in proportion on the same basis for direct disposal of relevant assets of liabilities by the investee. Owner's equities recognized arising from change in other owners' equities other than net gain or loss, other comprehensive income and profit distribution of the investee are carried forward to the current profit or loss in proportion, except for the other comprehensive income arising from the change on re-measurement of the net liabilities or net assets under the defined benefit plan by the investee.
In case of loss of common control over or material impact on the investee due to the disposal of part of the equity investments, the remaining equity after the disposal are computed according to the principles for recognition and measurement of financial instruments, and the difference between the fair value and book value on the day of loss of common control or material impact is charged to the current profit or loss. For other comprehensive income that is recognized from original equity investment by using the equity method, the accounting treatment will be made on the basis the same as that for the direct disposal of related assets and liabilities with the investee when the equity method is terminated for accounting purpose. Owner's equities recognized arising from change in other owners' equities other than net gain or loss, other comprehensive income and profit distribution of the investee are
entirely transferred to the current profit or loss when the accounting under the
Notes to the Financial Statements Page 21
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
equity method is ended.
In case of loss of common control over or material impact on the investee due to the disposal of part of the equity investments, the remaining equity after the disposal are computed under the equity method, with the adjustment made as if such remaining equities are calculated under the equity method after they are obtained, when the separate financial statement is prepared; the remaining equities after disposal leading to the incapable exercise of common control over or material impact on the investee shall be treated according to the principles for recognition and measurement of financial instruments, and the difference between the fair value and book value on the day of loss of common control or material impact is charged to the current profit or loss.
If the equities disposed were obtained from the business merger by reason of additional investment or others, and the remaining equities after disposal are calculated under the cost method or equity method when the individual financial statement is prepared, other comprehensive income and other owners' equities recognized and arising from the calculation of the equity investment held before the acquisition date under the equity method will be carried forward in proportion; if the remaining equities after disposal are treated according to the principles for recognition and measurement of financial instruments, both of other comprehensive income and other owners' equities are entirely carried forward.
3.15 Investment property
Investment properties are properties to earn rentals or for capital appreciation or both. Examples include land leased out under operating leases, land held for long-term capital appreciation, buildings leased out under operating leases, (including buildings that have been constructed or developed for future lease out under operating leases, and buildings that are being constructed or developed for future lease out under operating leases).
The Company adopts cost model to measure all current investment properties. The Company adopts the same depreciation policy for the investment property measured at cost model building for renting as that for theCompany’s fixed assets and the same amortization policy of land use right for renting as that for theCompany’s intangible assets.
Notes to the Financial Statements Page 22
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
3.16 Fixed assets
3.16.1 Criteria for recognition of fixed assets
Fixed assets refer to tangible assets held for the purpose of producing commodities, providing services, renting or business management with useful lives exceeding one accounting year. Fixed assets will only be recognized when all the following criteria are satisfied: Fixed assets will only be recognized when all the following criteria are satisfied:
(1) It is probable that the economic benefits relating to the fixed assets will flow into the Company; and
(2) the costs of the fixed asset can be measured reliably.
3.16.2 Depreciation method
Depreciation of fixed assets is provided on a category basis using the straight-line method. The depreciation rates are determined according to the categories, estimated useful lives and estimated net residual rates of fixed assets. If the components of a fixed asset have different useful lives or cause economic benefit for the Company in different ways, different depreciation rate or method shall be adopted for depreciation on an individual component basis.
For fixed assets acquired under finance leases, if it is reasonably certain that the ownership of the leased assets will be transferred to the lessee by the end of the lease term, they shall be depreciated over their remaining useful lives; otherwise, the leased assets shall be depreciated over the shorter of the lease terms or their remaining useful lives.
Depreciation of fixed assets, depreciation period, residual rate and annual depreciation rates are as follows:
|||
|-|-|
|Depreciationperiods (years)|Residualrates (%)|
|25-35|3|
|7-15|3|
|8-10|3|
|5-10|3|

Notes to the Financial Statements Page 23
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
3.16.3 Basis for recognition and measurement of fixed assets acquired under the finance lease
The fixed assets acquired under financing lease are recognized if one of the following conditions is specified by the Company and the leaser in their lease agreement:
(1) The ownership of the leased assets is transferred to the Company by the end of the lease terms;
(2) The Company has the option to purchase the assets at prices which are expected to be sufficiently lower than fair values at the date the option becomes exercisable that, at the inception of the leases, it is reasonably certain that the option will be exercised;
(3) The lease terms cover the major part of the economic lives of the assets, even if titles are not transferred;
(4) At the inception of the leases, the present values of the minimum lease payments amount to at least substantially all of the fair values of the leased assets.
On the lease commencement date, the book-entry value of a fixed asset acquired under financing lease is measured at theasset’s fair value or the present value of the minimum lease payment, whichever is the lower. The minimum lease payment is recorded as the book-entry value of the long-term payables, and the difference between them is deemed as the unrecognized financing expenses.
3.17 Construction in progress
The book values of the construction in progress are stated at total expenditures incurred before reaching working condition for their intended use. For construction in progress that has reached working condition for intended use but relevant budgets for the completion of projects have not been completed, the estimated values of project budgets, prices, or actual costs should be included in the costs of relevant fixed assets, and depreciation should be provided according to relevant policies of the Company when working condition is reached. After the completion of budgets needed for the completion of projects, the estimated values should be substituted by actual costs, but depreciation already provided is not adjusted.
Notes to the Financial Statements Page 24
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
3.18 Borrowing costs
3.18.1 Principles for recognition of capitalization of borrowing costs
Borrowing costs include the interest on borrowings, the amortization of discount or premium, auxiliary expenses, exchange differences incurred by foreign currency borrowings, etc.
The borrowing costs incurred to the Company and directly attributable to the acquisition and construction or production of assets eligible for capitalization should be capitalized and recorded into asset costs; other borrowing costs should be recognized as costs according to the amount incurred and be included into current profit and loss.
Assets eligible for capitalization refer to fixed assets, investment property, inventories and other assets which may reach their intended use or sale status only after long-time acquisition and construction or production activities.
Borrowing costs may be capitalized only when all the following conditions are met at the same time:
(1) the asset disbursements have already incurred, which shall include the cash paid, non-cash assets transferred or interest bearing debts undertaken for the acquisition and construction or production activities for preparing assets eligible for capitalization;
(2) the borrowing costs has already incurred; and
(3) the acquisition and construction or production activities which are necessary to prepare the asset for its intended use or sale have already started.
3.18.2 Capitalization period of borrowing costs
Capitalization period refers to the period from commencement of capitalization of borrowing costs to its cessation; period of suspension for capitalization is excluded. When the qualified asset under acquisition and construction or production is ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased.
Where construction for assets purchased, constructed or manufactured eligible for
Notes to the Financial Statements Page 25
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
capitalization is completed in stages, which can be used while construction of the other parts continues, capitalization of attributable borrowing costs should cease when substantially all of the activities necessary to prepare that part for its intended use or sale are complete.
Where construction for each part of assets purchased, constructed or manufactured has been completed separately but can be used or sold only after the entire assets have been completed, capitalization of attributable borrowing costs should cease at the completion of the entire assets.
3.18.3 Period of capitalization suspension
If the acquisition and construction or production activities of assets eligible for capitalization are interrupted abnormally and this condition lasts for more than three months, the capitalization of borrowing costs should be suspended; if the interruption is necessary for the acquisition and construction or production to prepare the assets for their intended use or sale, the capitalization of borrowing costs should continue. The borrowing costs incurred during interruption are recognized in the current profit and loss, and the capitalization of borrowing costs continues after the restart of the acquisition and construction or production activities of the assets.
3.18.4 Capitalization rate and measurement of capitalized amount of borrowing costs As for special borrowings borrowed for acquiring and constructing or producing assets eligible for capitalization, the to-be-capitalized amount shall be determined at interest expense of special borrowing actually incurred in the current period less the interest income of the borrowings unused and deposited in bank or return on temporary investment.
As for general borrowings used for acquiring and constructing or producing assets eligible for capitalization, the to-be-capitalized amount should be calculated by multiplying the weighted average of asset disbursements of the part of accumulated asset disbursements exceeding special borrowings by the capitalization rate of used general borrowings. The capitalization rate is calculated by using the weighted average interest rate of general borrowings.
3.19 Intangible assets
Notes to the Financial Statements Page 26
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
3.19.1 Measurement of intangible assets
(1) The Company initially measures intangible assets at cost on acquisition;
The costs of external purchase of intangible assets comprise their purchase prices, related taxes and surcharges and any other directly attributable expenditure incurred to prepare the asset for its intended use. If payments for the purchase of intangible assets are extended beyond the normal credit terms with financing nature, the costs of intangible assets are determined on the basis of present values of the purchase prices.
For intangible assets obtained from debtors in settlement of his liabilities in case of debt restructuring, they should be initially stated at their fair values. Differences between the book values and the fair values of the intangible assets are charged to profit or loss for the current period.
If the exchange of non-monetary assets has commercial substance, and the fair values of these assets can be measured reliably, the book-entry values of intangible assets traded in are based on the fair values of the intangible assets traded out unless there is any conclusive evidence that the fair values of the assets traded in are more reliable. If the exchange of non-monetary assets does not meet the above criteria, the costs of the intangible assets traded in should be the book values of the assets traded out and relevant taxes and surcharges paid, and no profit or loss shall be recognized.
(2) Subsequent measurement
The useful lives of the intangible assets are analyzed and determined on their acquisition.
As for intangible assets with limited useful life, straight-line amortization method is adopted in the period when the intangible assets generate economic benefit for enterprise; if the period when the intangible assets generate economic benefit for enterprise cannot be forecasted, the intangible assets shall be deemed as those with indefinite useful life and shall not be amortized.
3.19.2 Estimate of the useful life of the Intangible assets with finite useful lives:
The useful lives and amortization methods of intangible assets with limited useful lives
Notes to the Financial Statements Page 27
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
are reviewed at each year end.
Upon review, the useful lives and amortization method of the intangible assets as at the end of the year were not different from those estimated before.
3.19.3 Basis for judgment of intangible assets with indefinite useful life and procedures for review of the life thereof
The useful lives and amortization method of intangible assets with limited useful lives are reviewed at the end of each period.
Upon review, the useful lives and amortization method of the intangible assets as at the end of the year were not different from those estimated before.
3.19.4 Specific criteria of classification into the research phase and the development phase Expenditures on an internal research and development project shall be classified into expenditures on the research phase and expenditures on the development phase.
Research phase: Research is original and planned investigation, undertaken with the prospect of gaining new scientific or technical knowledge and understanding.
Development phase: Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, or products before the start of commercial production or use.
3.19.5 Criteria for capitalization of qualifying expenditures during the development phase Expenditures arising from development phase on internal research and development projects must be capitalized if the Company can satisfy all of the following criteria: (1) It is technically feasible to finish intangible assets for use or sale;
(2) It is intended to finish and use or sell the intangible assets;
(3) the method that the intangible assets generate economic benefits, including existence of a market for products produced by the intangible assets or for the intangible assets themselves, shall be proved. Or, if to be used internally, the
usefulness of the assets shall be proved;
Notes to the Financial Statements Page 28
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(4) adequate technical, financial, and other resources are available to complete the assets, and the Company has the ability to use or sell the assets; and
(5) The expenditures attributable to the intangible assets during their development phase can be reliably measured.
If the above conditions are not satisfied, expenditures on the development phase shall be included in current profit and loss when they occur. Expenditures on the research phase shall be included in current profit and loss when they occur.
According to the Accounting Standards for Enterprises in combination with the actual situation of the Company, the period between the report on pre-study of project to the issuance of project assessment and examination report is defined as the research state, in which the expenditures incurred are expensed when incurred and charged to the current profit or loss.
In the development stage, research findings or other knowledge is applied to a plan or design for the production of new or substantially improved materials, devices, or products before the start of commercial production or use. This phase is equipped with the basic conditions for the formation of a new product or technology to a greater extent. According to the actual situation of the Company, the period between the adoption of project assessment and examination with the assessment and examination report issued to the batched production is defined as the development stage. The project development expenditures will be capitalized, if the conditions for capitalization of development expenditures are met.
All expenditures incurred on research of application of basic techniques are classified as research stage expenditures and charged to the current profit or loss when incurred. 3.20 Impairment of long-term assets
The Company will conduct the impairment test if any evidence suggests that the long assets, such as the long-term equity investment and the investment property, fixed assets, construction in progress and intangible assets, are impaired on the balance sheet date. If impairment test
results indicate that the recoverable amounts of the assets are lower than their carrying amounts,
Notes to the Financial Statements Page 29
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
the provision for impairment is made based on the differences which are recognized as impairment losses. The recoverable amounts of intangible assets are the higher of their fair values less costs to sell and the present values of the future cash flows expected to be derived from the assets. The provision for assets impairment is calculated and recognized by the individual asset. If it is difficult to estimate the intangible amount of an individual asset, the Company shall estimate the recoverable amount of the asset portfolio that the individual asset belongs to. The asset portfolio is the minimum asset group that can independently generate the cash inflow.
At least the goodwill and indefinite-life intangible assets impairment test is conducted at the year-end.
The Company conducts an impairment test for the goodwill. The book value of goodwill arising from business combinations is amortized to relevant asset groups with a reasonable method since the date of acquisition; or amortized to relevant combination of asset groups if it is difficult to be amortized to relevant asset groups. The book value of goodwill is amortized to relevant asset groups or combinations of asset groups according to the proportion of the fair value of such asset groups or combinations of asset groups in the total fair value of relevant asset groups or combinations of asset groups. Where the fair value cannot be reliably measured, it should be amortized according to proportion of the book value of each asset group or combination of asset group in the total book value of relevant asset groups or combinations of asset groups.
When making an impairment test on the relevant asset groups or combination of asset groups containing goodwill, if any indication shows that the asset groups or combinations of asset groups related to the goodwill may be impaired, the Company shall first conduct an impairment test on the asset groups or combinations of asset groups not containing goodwill, calculate the recoverable amount and compare it with the relevant book value to recognize the corresponding impairment loss. Then the Company shall conduct an impairment test on the asset groups or combinations of asset groups containing goodwill, and compare the book value of these asset groups or combinations of asset groups (including the book value of the goodwill apportioned thereto) with the recoverable amount. Where the recoverable amount of the relevant asset groups or combinations of asset groups is lower than the book value thereof, the Company shall recognize the impairment loss of the goodwill.
Notes to the Financial Statements Page 30
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
The above impairment loss is not reversed in the future accounting period once recognized. 3.21 Long-term deferred expenses
Long-term deferred expenses refer to the expenses which have been already incurred but will be borne in the current period and in the future with an amortization period of over 1 year. Long-term deferred expenses are evenly amortized over the benefit period.
3.22 Employee compensation
3.22.1 Accounting treatment of short-term remuneration
During the accounting period in which employees provide service to the Company, the short-term remuneration actually incurred is recognized as liabilities and charged to the current profit or loss or the relevant assets cost.
The medical insurance premium, work-related injury insurance premium and the housing provident fund paid by the Company for its employees, together with the labor union expenditures and employee education are used to calculate and determine the relevant employee compensation amount based on the prescribed accrual basis and accrual proportion.
The non-monetary benefits for employees that can be measured reliably are measured at fair value.
3.22.2 Accounting treatment of benefits paid after departure
The basic endowment insurance premium and unemployment insurance premium paid by the Company for its employees in accordance with relevant provisions of the local government are recognized as liabilities and charged to the current profit or loss or the relevant assets cost, with the payable amount calculated based on the local prescribed payment base and percentage, during the accounting period in which the employees provide services to the Company.
The Company pays a certain percentage of the total employee compensation to the local social institution for the payment/payment under annuity plan, and record the relevant expenditures into the current profit or loss or the relevant assets cost.
Notes to the Financial Statements Page 31
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
3.22.3 Accounting treatment of dismissal welfare
Where the Company cannot unilaterally withdraw when termination benefits due to termination of employment or layoff proposal offered, or confirm the reorganization involves the payment of termination benefits when associated costs or expenses (both what early), confirm termination benefits employees pay liabilities, and profit or loss. 3.23 Estimated liabilities
3.23.1 Recognition criteria for estimated liabilities
The Company recognizes the estimated liabilities when the obligations relating to litigation, debt-guarantee, loss contract, restructuring and other contingencies satisfy the following conditions simultaneously:
(1) That obligation is a present obligation of the Company;
(2) The performance of such obligation is likely to result in outflow of economic benefits from the Company; and
(3) The amount of the obligation can be measured reliably.
3.23.2 Measurement of a variety of estimated liabilities
The estimated liabilities of the Company are initially measured as the best estimate of expenses required for the performance of relevant present obligations.
When determining the best estimate, the Company shall comprehensively consider the risks, uncertainties, time value of money, and other factors relating to the contingencies. If the time value of money is significant, the best estimates shall be determined after discount of relevant future cash outflows.
The best estimates shall be treated as follows in different circumstances:
If there is continuous range (or interval) for the necessary expenses, and probabilities of occurrence of all the outcomes within this range are equal, the best estimate shall be determined at the average amount of upper and lower limits within the range.
Given the fact that there is no continuous range (or interval) for the necessary expenses,
or probabilities of occurrence of all the outcomes within this range are unequal despite
Notes to the Financial Statements Page 32
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
such a range exists, in case that the contingency involves a single item, the best estimate shall be determined at the most likely outcome; if the contingency involves two or more items, the best estimate should be determined according to all the possible outcomes with their relevant probabilities.
When all or part of the expenses necessary for the settlement of an estimated liabilities are expected to be compensated by a third party or other parties, the compensation shall be separately recognized as an asset only when it is virtually certain that the compensation will be received. The amount recognized for the compensation shall not exceed the book value of the estimated liabilities.
See the Note 5.28 Estimated Liabilities for details.
3.24 Share-based payment
The share-based payment is the transaction the Company has to grant the equity instrument to employees or assume the liability determined based on the equity instrument, for the service provided by the employees[or otherparties]. The share-based payments of the Company can be divided into the equity-settled share-based payments and the cash-settled share-based payments. 3.24.1 Equity-settled share-based payments and equity instruments
In case of the equity-settled share-based payment for the service provided by employees, the measurement is based on the fair value of the equity instruments granted to employees. Where the Company carries out a restricted share-based payment, the employees subscribe shares by contributing capital, and the shares cannot be traded or transferred in the market until they satisfy the conditions for removing the freeze; if the conditions for removing the freeze as prescribed by the ultimate stock stimulating plan fail to be satisfied, the Company shall repurchase the shares as previously agreed. When the Company receives the payments for subscription of restricted shares from the employees, it shall recognize the share capital and capital reserves (share capital premiums) according to the payments for subscription received, and recognize a liability and treasury shares with respect to the repurchase obligation. On every balance sheet date during the waiting period, the Company estimates the quantity of the exercisable equity instruments in light of the latest subsequent information, such as the change in the number of employees obtaining the exercisable equity instrument or whether the specified performance requirements are met, based on which the services obtained in the
current period are charge to the relevant costs or expenses at the fair value on the grant
Notes to the Financial Statements Page 33
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
date, with the capital reserves added correspondingly. Those payments which are exercisable immediately after the grant are charged to the relevant costs or expenses, with the capital reserves added correspondingly. After the vesting date, the recognized relevant costs or expenses or total amount of owners' equity shall not be adjusted any more.
No cost or expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognized as if the terms had not been modified. In addition, an expense is recognized for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled share-based payment is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. Where employees or other parties are permitted to choose to fulfill non-vesting conditions but have not fulfilled during the pending period, equity-settled share-based payments are deemed cancelled. However, if a new equity instrument is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the new equity instrument are treated as if they were a modification of the original award.
3.24.2 Cash-settled share-based payments and equity instruments
The cash-settled share-based payment is measured in accordance with the fair value of liability calculated and confirmed based on the shares or other equity instruments undertaken by the Company. The cash-settled share-based payment is initially measured in accordance with the fair value on the vesting date, in consideration of the terms and conditions for granting the equity instruments. If the right may be exercised immediately after the grant, the fair value of the liabilities shall, on the vesting date, be included in the costs or expenses, together with a corresponding increase in the liabilities; if the right
cannot be exercised until the vesting period comes to an end or until the prescribed
Notes to the Financial Statements Page 34
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
performance conditions are met, then within the vesting period, the services obtained in the current period shall, based on the best estimate of the number of vested equity instruments, be included in the relevant costs or expenses at the fair value of the liabilities on the vesting date, together with a corresponding increase in the liabilities. On each balance sheet date and on each account date prior to the settlement of the relevant liabilities, the fair values of the liabilities are re-measured and the changes in the fair values thereof are included in the current profits and losses.
3.25 Revenues
3.25.1 General principles for recognition of revenues from sales of goods:
(1) The Company has transferred to the buyer the significant risks and rewards of ownership relevant to the goods in question;
(2) The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (3) The relevant amount of revenue can be measured reliably;
(4) It is probable that the economic benefits related to the transaction will flow into the Company; and
(5) The relevant costs incurred or to be incurred can be measured reliably.
3.25.2 Concrete principles for revenues from primary businesses
Sales of automobile air-conditioner: the Air-conditioner Company deliveries goods according to the customers' production plans and safty stock; after the customers use the products, the salesmen issue a notification of making out an invoice according to the customers' monthly usage amounts and contracted prices, the finance department issues an invoice and the revenues from sales shall be recognized.
3.26 Government grants
3.26.1 Types
Government grants refer to the monetary or non-monetary assets obtained by the
Company from the government for free. Government subsidies are classified into
Notes to the Financial Statements Page 35
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
government subsidies related to assets and government subsidies related to income. Government subsidies related to assets refer to the subsidies obtained by the Company from the government and used to form long-term assets through acquisition and construction or otherwise, including the financial appropriation for purchase of fixed assets or intangible assets and the finance discounts for special borrowings of fixed assets. Government subsidies related to income refer to those other than the government subsidies related to assets.
3.26.2 Recognition of time-point and accounting treatment
Government grants related to assets are recognized as deferred income and included in non-operating income over the useful lives of the assets constructed or purchased by stages;
If government subsidies related to income are used to compensate theCompany’s relevant expenses or losses in future periods, such government subsidies should be recognized as deferred income on acquisition and be included into the current non-operating income in the period of recognizing relevant expenses; if government subsidies related to income are used to compensate theenterprise’s relevant expenses or losses incurred, such government subsidies are directly included into the current non-operating income on acquisition.
3.27 Deferred income tax assets and deferred income tax liabilities
Deferred income tax assets shall be recognized for deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized. As for any deductible loss or tax deduction that can be carried forward to the next year, the corresponding deferred income tax assets shall be determined to the extent that the amount of future taxable income to be offset by the deductible loss or tax deduction to be likely obtained.
Taxable temporary differences are recognized as deferred income tax liabilities except in special circumstances.
Special circumstances in which deferred income tax assets or deferred income tax liabilities
shall not be recognized include: the initial recognition of goodwill; other transactions or events
Notes to the Financial Statements Page 36
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
excluding business combinations, which affect neither accounting profits nor the taxable income (or deductible losses) when occurred.
If the Company has the legal right of netting and intends to settle in net amount or to obtain assets and discharge liabilities simultaneously, the income tax assets and income tax liabilities of the Company for the current period shall be presented based on the net amount after offset. When the Company has the legal rights to balance income tax assets and income tax liabilities for the current period with net settlement, and deferred income tax assets and deferred income tax liabilities are related to the income tax which are imposed on the same taxpaying subject by the same tax collection authority or on different taxpaying subjects, but, in each important future period in connection with the reverse of deferred income tax assets and liabilities, the involved taxpaying subject intends to balance income tax assets and liabilities for the current period with net settlement at the time of obtaining assets and discharging liabilities, deferred income tax assets and deferred income tax liabilities shall be presented based on the net amount after offset. 3.28 Leases
3.28.1 Accounting treatment of operating lease
(1) Lease fees paid by the Company for leased asset shall be amortized at straight-line method over the whole lease period (including rent-free period) and shall be included in the current expenses. Initial direct costs relating to lease transactions incurred by the Company shall be recognized as the current expenses.
If the expense related to the lease which shall be paid by the Company is assumed by the lessor of the asset, then such expenses shall be deducted from total lease fees, and the balances shall be amortized over the lease term s and charged to the current expenses.
(2) Lease fees received by the Company from leasing assets shall be amortized at straight-line method over the whole lease period (including rent-free period), and shall be recognized as lease income. Initial direct costs relating to lease transactions incurred by the Company shall be recognized as the current expenses; if the amounts are material, they shall be capitalized and included in the current income on the same basis as the recognition of lease income.
If expenses relating to leases which should be borne by the lessee of the assets are paid by the Company, they shall be deducted from the total lease income and the
balances shall be amortized over the lease terms by the Company.
Notes to the Financial Statements Page 37
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
3.28.2 Accounting treatment of financing lease
(1) Assets acquired under financing leases: At the commencement of the lease terms, assets acquired under financing leases shall be recorded at the lower of their fair values and the present values of the minimum lease payments, and the Company shall recognize the long-term payables at amounts equal to the minimum lease payments, and shall record the differences between book value of the leased assets and the long-term payables as unrecognized finance charges. The Company adopts the effective interest rate method for unrecognized financing charges, which shall be amortized over the lease terms and included in financial expenses. Initial direct costs incurred by the Company shall be included in the value of leased assets. (2) Assets rented out under financing leases: At the commencement of the lease terms, the Company shall recognize the differences between the undiscounted rents receivable plus unguaranteed residual values and their present values as unrealized financing income, and shall recognize them as lease income during each period when rents are received. Initial direct costs associated with the lease transactions and incurred by the Company shall be included in the initial measurement of the financing lease receivable and lease income recognized over the lease terms shall be reduced accordingly.
3.29 Termination of operation
Termination of operation refers to any integral part that satisfies any of the following conditions, has been disposed or classified into assets held for sale by the Company and that is able to be separately distinguished upon operation and preparation of the financial statements:
(1) the integral part represents an independent primary business or a key operation region; (2) the integral part is an element of the plan of proposing to dispose an independent primary business or a key operation region; or
(3) the integral part is a subsidiary acquired only for the resale purpose.
3.30 Significant adjustments for changes in accounting policies and accounting estimates 3.30.1 Significant adjustments for changes in accounting policies
Enforce Value - added Tax Accounting Regulations.
Notes to the Financial Statements Page 38
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
The Ministry of Finance released Value - added Tax Accounting Regulations (Financial Accounting[2016] No:22 ) on December 3, 2016, which is appropriate for related transacrions form May 1, 2016. The main impact of the implementation of this provision is as follows:
The content and reasons of accounting policy changes Affected report item name and amount（1）The " Business tax and surcharges " item in the income statement
Taxes and surcharges
is adjusted to " Taxes and surcharges ".
（2）House property tax, Land use tax, Vehicle and vessel use tax and
Stamp duty incurred from the business activities on May 1, 2016 will Increase Business taxes and surcharges this be reclassified from the "General and administrative expenses" item to year RMB2,217,753.53；Reduce the general the "Business taxes and surcharges" project. But tex which occurred and administrative expenses this year RMB before May 1, 2016will not be adjusted .The comparative data can not 2,217,753.53.
be adjusted.
3.30.2 Major changes in accounting estimates
There is no major change in accounting estimates in the Company for the current year. 4. Taxation
4.1 Major tax types and tax rates applicable to the Company
||
|-|
|Basis of tax assessment|
|The output tax is calculated based on the revenuefrom sales of goods and the provision of taxablelabor services according to tax law, and valueadded tax payable should be the balance of theoutput tax for the period after deducting thedeductible input tax for the period.|
|Levied based on the taxable sales revenues|
|Levied based on the taxable income (Since May 1,2016, the Business tax changes to Value-addedtax)|
|Levied based on the actual payment of businesstax, VAT and consumption tax|
|Levied based on the taxable income|

If there are subjects of tax payment subject to different enterprise income tax rates, the
information notes shall be disclosed
Notes to the Financial Statements Page 39
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
Name of subject of tax payment Income tax rate Chongqing Jianshe Motorcycle Co., Ltd. 15% Shanghai Jianshe Motorcycle Co., Ltd. 25% Chongqing Jianshe Automobile A/C Co., Ltd. 15% 4.2 Preferential tax treatment
The company is subject to the enterprise income tax rate of15% in 2016, as a result of the preferential enterprise income tax policies to promote the large-scale development of the western region in accordance with the Announcement on Issues of Enterprise Income Tax concerning In-depth Implementation of Western Region Large-scale Development Strategy (Announcement of the State Administration of Taxation[2012] No.12).
Chongqing Jianshe Automobile A/C Co., Ltd. by high and new technology enterprise qualification on November 8, 2013, acquire the qualification of new high-tech enterprises, Certificate No. GR201351100081, valid for three years. Chongqing Jianshe Automobile A/C Co., Ltd. calculates and pay enterprise income tax shall be levied at the reduced tax rate15% from 2014 to 2016.
The Company and other subsidiaries pay the enterprise income tax at a tax rate of25%.
5. Notes to the items of consolidated financial statements
Chongqing Jianshe Motorcycle Co., Ltd. completed the reorganization on December 31, 2015. The scope of consolidated financial statements about income statements and cash flow statement are consistent with it before reorganization, including the results of the reorganization of the motorcycle business and the cash flow. The income statement and cash flows statements of 2016 only include the results of the business after the reorganization (the scope of consolidation for the year is set out in Note 1.2 Scope of the consolidated financial statements), resulting in great change about the income statement and cash flow statement compared with the previous year.
5.1 Cash and cash equivalents
||
|-|
|Balance as atDecember 31, 2016|
|31,205.34|
|273,737,553.12|
|240,646,064.11|
|514,414,822.57|

Remark：The monetary funds at the end of the year increased by69.96% compared with the
previous year, mainly because of the receipt of Chongqing construction mechanical
and electrical Co. LTD.
Notes to the Financial Statements Page 40
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
Including: The details about restricted monetary funds are as follows:
||
|-|
|Balance as atDecember 31, 2016|
|240,646,064.11|
|240,646,064.11|

 5.2 Notes receivable
5.2.1 Presentation of notes receivable by category
||
|-|
|Balance as atDecember 31, 2016|
|14,907,890.35|

 5.2.2 Notes receivable endorsed or discounted by the Company as at December 31, 2016 and not yet due on the balance sheet date
||
|-|
|Amount derecognized asat December 31, 2016|
|626,847,318.00|
|13,835,000.00|
|640,682,318.00|

Notes to the Financial Statements Page 41
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
5.3 Accounts receivable
5.3.1 Disclosure of accounts receivable by category
||||||||||
|-|-|-|-|-|-|-|-|-|
|Balance as at December 31, 2016|||||||||
|Book balance||Provision for bad debts||Book value|Book balance||Provision for bad debts||
|Amount|Proportion(%)|Amount|Proportion ofprovision(%)||Amount|Proportion(%)|Amount|Proportionofprovision(%)|
|270,302,666.49|100.00|14,715,226.57|5.44|255,587,439.92|232,282,147.28|100.00|14,522,938.85|6.25|
|270,302,666.49|100.00|14,715,226.57|5.44|255,587,439.92|232,282,147.28|100.00|14,522,938.85|6.25|

 Accounts receivable with provision for bad debts made using the aging analysis method among those portfolios:
Balance as at December 31, 2016
Aging
|||
|-|-|
|Accounts receivable|Provision for bad debts|
|238,246,426.46||
|4,788,616.59|239,430.83|
|9,877,311.07|987,731.10|

Notes to the Financial Statements Page 42
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
|||
|-|-|
|5,362,705.72|1,608,811.71|
|130,160.18|65,080.09|
|416,368.14|333,094.51|
|11,481,078.33|11,481,078.33|
|270,302,666.49|14,715,226.57|

5.3.2 Provision for bad debts provided in the current year
The provision for bad debts provided in the current year amounts to RMB 192,287.72.
5.3.3 Information on the top five accounts receivable by the debit balance as at December 31, 2016
The top five accounts receivable by the credit balance as at December 31, 2016 total RMB 153,546,008.17, accounting for56.81% of total amount of balance as at December 31, 2016 of accounts receivable, and the balance as at December 31, 2016 of provision for bad debts provided correspondingly totals RMB 23,469.05.
5.4 Advances to suppliers
5.4.1 Presentation of advances to suppliers by aging
||||
|-|-|-|
|Balance as at December 31, 2016|||
|Book balance|Proportion (%)|Book balance|
|10,729,869.21|98.51|8,251,935.87|
|73,792.01|0.68|1,041,281.19|
|71,862.00|0.66|8,039.80|
|16,409.80|0.15|8,370.00|
|10,891,933.02|100.00|9,309,626.86|

Notes to the Financial Statements Page 43
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
5.4.2 Information on the top five advances to suppliers by the credit balance as at December 31, 2016
The top five advances to suppliers by the debit balance as at December 31, 2016 total RMB 8,402,776.37, accounting for 77.15% of total amount of balance as at December 31, 2016 of advances to suppliers.
5.5 Other receivables
5.5.1 Disclosure of other receivables by category
||||||||||
|-|-|-|-|-|-|-|-|-|
|Balance as at December 31, 2016|||||||||
|Book balance||Provision for bad debts||Book value|Book balance||Provision for bad debts||
|Amount|Proportion(%)|Amount|Proportion ofprovision (%)||Amount|Proportion(%)|Amount|Proportion ofprovision (%)|
|13,109,254.76|97.32|4,529,364.68|34.55|8,579,890.08|262,146,013.26|99.85|4,336,368.84|1.65|
|361,125.35|2.68|361,125.35|100.00||405,125.35|0.15|405,125.35|100.00|
|13,470,380.11|100.00|4,890,490.03|36.31|8,579,890.08|262,551,138.61|100.00|4,741,494.19|1.81|

 Other receivables with no significant amount of individual at the end of year and provision for bad debt
Balance as at December 31, 2016
Otherreceivables（Byunit）
||||
|-|-|-|
|Other receivables|Provision for bad debts|Proportion|

Notes to the Financial Statements Page 44
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||||
|-|-|-|
|78,825.35|78,825.35|100%|
|209,000.00|209,000.00|100%|
|56,500.00|56,500.00|100%|
|16,800.00|16,800.00|100%|
|361,125.35|361,125.35||

Other receivables with provision for bad debts made using the aging analysis method among those portfolios:
Balance as at December 31, 2016
Aging
|||
|-|-|
|Other receivables|Provision for bad debts|
|5,156,110.44||
|1,534,749.60|76,737.48|
|2,184,186.13|218,418.61|
|4,234,208.59|4,234,208.59|
|13,109,254.76|4,529,364.68|

5.5.2 Provision for bad debts provided in the current year
RMB 148,995.84 is provided for bad debts in the current year.
5.5.3 Other receivables classified by payment properties
Notes to the Financial Statements Page 45
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||
|-|
|Book balance as at December 31, 2016|
|8,875,046.17|
|4,595,333.94|
|13,470,380.11|

||
|-|
|Remark: Compared with the previous year, there is substantial reduction of balance this year, mainly due to the repayment of the parent company|
|Chongqing Jianshe mechanical and electrical co., LTD.|

5.5.4 Information on the top five other receivables by the debit balance as at December 31, 2016
The top five other receivables by the credit balance as at December 31, 2016 total RMB 8,174,577.65, accounting for 60.69% of total amount of balance as at December 31, 2016 of other receivables, and the balance as at December 31, 2016 of provision for bad debts provided correspondingly totals RMB 3,869,813.34.
5.6 Inventories
5.6.1 Classification of inventories
||||||
|-|-|-|-|-|
|Balance as at December 31, 2016|||||
|Book balance|Provision for inventoryimpairment|Book value|Book balance|Provision for inventoryimpairment|
|47,168,260.45|4,618,914.59|42,549,345.86|59,287,827.35|4,618,914.59|
|1,931,391.64||1,931,391.64|1,766,745.42||
|156,900,503.61|174,210.57|156,726,293.04|90,089,486.73|174,210.57|

Notes to the Financial Statements Page 46
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||||||
|-|-|-|-|-|
|206,000,155.70|4,793,125.16|201,207,030.54|151,144,059.50|4,793,125.16|

 5.6.2 Inventory provision
||||||
|-|-|-|-|-|
|Balance as at January1, 2016|Increase in 2016||Decrease in 2016||
||Provision|Others|Reversal orwrite-off|Others|
|4,618,914.59|||||
|174,210.57|||||
|4,793,125.16|||||

 5.7 Other current assets
||
|-|
|Balance as at December 31, 2016|
|1,734,063.70|

 5.8 Available-for-sale financial assets
5.8.1 Information on available-for-sale financial assets
||||||
|-|-|-|-|-|
|Balance as at December 31, 2016|||||
|Book balance|Provision forimpairment|Book value|Book balance|Provision forimpairment|
|1,140,915.04|1,140,915.04||1,140,915.04|1,140,915.04|
|1,140,915.04|1,140,915.04||1,140,915.04|1,140,915.04|
|1,140,915.04|1,140,915.04||1,140,915.04|1,140,915.04|

Notes to the Financial Statements Page 47
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
5.8.2 Available-for-sale financial assets measured at cost as at December 31, 2016
||||||||||
|-|-|-|-|-|-|-|-|-|
|Book balance||||Provision for impairment||||Proportion of shareholdingin investee (%)|
|As at January 1, 2016|Increase in 2016|Decrease in2016|As at December31, 2016|As at January 1,2016|Increase in2016|Decrease in2016|As at December31, 2016||
|1,140,915.04|||1,140,915.04|1,140,915.04|||1,140,915.04|51.00|

5.9 Long-term equity investments
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Balance as atJanuary 1,2016|Increase/decrease in 2016 (+/-)|||||||Balance as atDecember 31,2016|Provision forimpairment in2016|
||Additionalinvestment|Decrease ininvestment|Profits and losseson investmentsrecognized underthe equity method|Othercomprehensiveincome|Changes inother equity|Declaration ofcash dividends orprofits|Others|||
|83,381,316.13|||3,128,796.18|||-3,332,000.00||83,178,112.31||

Notes to the Financial Statements Page 48
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
5.10 Investment properties
|||
|-|-|
|House,Buildings|Land use rights|
|131,695,310.84|20,902,264.96|
|131,695,310.84|20,902,264.96|
|131,695,310.84|20,902,264.96|
|32,213,005.48|5,058,544.71|
|27,951,379.64|4,640,499.39|
|4,261,625.84|418,045.32|
|32,213,005.48|5,058,544.71|
|99,482,305.36|15,843,720.25|

Remark：This year the company rent part of the real estate to Chongqing Jianshe mechanical and electrical Co. Ltd.
5.11 Fixed assets
5.11.1 Information on fixed assets
|||||
|-|-|-|-|
|Buildings andconstructions|Machineryequipment|Vehicles|Electronic andoffice equipment|
|220,860,967.06|570,104,727.83|8,924,256.63|14,390,721.93|
||63,316,079.64||1,387,132.46|
||29,317,530.29||1,387,132.46|
||33,998,549.35|||

Notes to the Financial Statements Page 49
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
|||||
|-|-|-|-|
|131,695,310.84|121,560.10|||
||121,560.10|||
|131,695,310.84||||
|89,165,656.22|633,299,247.37|8,924,256.63|15,777,854.39|
|51,221,590.06|350,255,332.76|6,988,970.66|9,839,774.70|
|2,703,874.88|26,740,152.11|170,162.40|1,472,588.37|
|2,703,874.88|26,740,152.11|170,162.40|1,472,588.37|
|27,951,379.64|117,913.40|||
||117,913.40|||
|27,951,379.64||||
|25,974,085.30|376,877,571.47|7,159,133.06|11,312,363.07|
|63,191,570.92|256,421,675.90|1,765,123.57|4,465,491.32|
|169,639,377.00|219,849,395.07|1,935,285.97|4,550,947.23|

5.11.2 The fixed assets which are rented out through operating lease
Items Book value as at December 31, 2016 Machinery equipment 41,913,560.74 5.11.3 Information on the fixed assets without certificate of title
||
|-|
|Book value|
|42,288,815.25|

5.12 Construction in progress
5.12.1 Information on the construction in progress
Notes to the Financial Statements Page 50
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||||||
|-|-|-|-|-|
|Balance as at December 31, 2016|||||
|Book balance|Provision forimpairment|Book value|Book balance|Provision forimpairment|
|2,252,455.05||2,252,455.05|40,366,114.52||
|186,377.38||186,377.38|69,315.38||
|2,438,832.43||2,438,832.43|40,435,429.90||

 5.12.2 Major changes in construction in progress for the current year
||||||
|-|-|-|-|-|
|Balance as atJanuary 1, 2016|Increase in2016|Transferred intofixed assets forthe current year|Otherdecreases in2016|Balance as atDecember 31,2016|
|40,366,114.52|25,202,420.17|63,316,079.64||2,252,455.05|
|69,315.38|117,062.00|||186,377.38|
|40,435,429.90|25,319,482.17|63,316,079.64||2,438,832.43|

5.13 Intangible assets
||
|-|
|Land use right|
|36,670,885.45|
|20,902,264.96|
|20,902,264.96|
|15,768,620.49|
|8,400,491.82|
|312,322.80|
|312,322.80|
|4,640,499.39|
|4,640,499.39|
|4,072,315.23|

Notes to the Financial Statements Page 51
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||
|-|
|11,696,305.26|
|28,270,393.63|

 5.14 Long-term deferred expenses
||||
|-|-|-|
|Balance as atJanuary 1, 2016|Increase in2016|Amortizationin 2016|
|3,345,497.21||1,383,409.99|
|580,594.64||71,093.21|
|3,926,091.85||1,454,503.20|

 5.15 Deferred income tax assets
5.15.1 Deferred income tax assets before offset
||||
|-|-|-|
|Balance as at December 31, 2016|||
|Deductible temporarydifferences|Deferred incometax assets|Deductible temporarydifferences|
|12,112,504.63|1,816,875.69|12,130,956.41|

5.15.2 Details of unrecognized deferred income tax assets
||
|-|
|Balance as at December 31, 2016|
|13,427,252.17|
|329,995,380.72|
|343,422,632.89|

 5.15.3 Deductible losses of unrecognized deferred income tax assets shall be due in the following years:
||
|-|
|Balance as at December 31, 2016|
|197,428,928.73|
|25,332,418.05|
|98,496,222.54|
|7,561,009.01|
|1,176,802.39|

Notes to the Financial Statements Page 52
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
Total 329,995,380.72 521,367,078.98 5.16 Other non-current assets
||
|-|
|Balance as at December31, 2016|
|9,240,209.19|

 5.17 Short-term borrowings
5.17.1 Classification of short-term borrowings:
||
|-|
|Balance as at December 31,2016|
|2,500,000.00|
|202,000,000.00|
|20,000,000.00|
|224,500,000.00|

 5.17.2 Guaranteed borrowings
||
|-|
|Borrowing balance|
|50,000,000.00|
|152,000,000.00|
|202,000,000.00|

5.17.3 Mortgaged borrowings
||
|-|
|Borrowing balance|
|2,500,000.00|

5.18 Notes payable
||
|-|
|Balance as at December 31, 2016|
|718,560,000.00|

 Remark: The notes payable of bank acceptance bills issued by the company in the current year are guaranteed by the bank acceptance bills margins with fixed quotas deposited by the Company with banks; at the same time, as for RMB171.41 million among the balance of notes payable,
Chongqing Jianshe mechanical and electrical co., LTD. bears the joint and several liability; as for
RMB10 million, Chongqing Jianshe Sales Co., Ltd. bears the joint and several liability.
Notes to the Financial Statements Page 53
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
5.19 Accounts payable
||
|-|
|Balance as at December 31, 2016|
|185,057,014.26|
|550,471.95|
|2,527,491.73|
|5,233,507.51|
|193,368,485.45|

 5.20 Advances from customers
||
|-|
|Balance as at December 31, 2016|
|8,453,280.37|
|492,125.78|
|34,866.60|
|145,853.56|
|9,126,126.31|

 5.21 Employee compensation payable
5.21.1 Presentation of employee compensation payable
||||
|-|-|-|
|Balance as atJanuary 1, 2016|Increase in2016|Decrease in 2016|
|1,512,042.07|43,468,658.98|43,391,687.03|
|142,455.87|8,305,143.61|7,406,800.96|
||7,464,852.40|7,464,852.40|
||145,308.40|145,308.40|
|1,654,497.94|59,383,963.39|58,408,648.79|

 5.21.2 Presentation of short-term compensation
||||
|-|-|-|
|Balance as atJanuary 1, 2016|Increase in2016|Decrease in2016|
|573,666.05|28,967,292.32|28,736,747.89|
||5,251,140.14|5,251,140.14|
|641,203.70|2,782,419.17|3,327,368.03|
|638,649.12|2,339,445.03|2,906,955.94|
|1,759.24|295,331.79|288,925.19|

Notes to the Financial Statements Page 54
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||||
|-|-|-|
|795.34|147,642.35|131,486.90|
|238,286.00|5,305,014.00|5,187,198.00|
|42,766.32|1,162,793.35|873,112.97|
|16,120.00||16,120.00|
|1,512,042.07|43,468,658.98|43,391,687.03|

 5.21.3 Presentation of defined contribution plans
||||
|-|-|-|
|Balance as atJanuary 1, 2016|Increase in2016|Decrease in2016|
|82,937.51|7,899,726.01|7,093,060.87|
|59,518.36|405,417.60|313,740.09|
|142,455.87|8,305,143.61|7,406,800.96|

 5.22 Taxes and surcharges payable
||
|-|
|Balance as at December31, 2016|
|73,009.55|
|393,030.84|
|134,270.95|
|1,005,278.13|
|3,119,147.99|
|1,988,736.03|
|3,727,900.64|
|1,808,215.20|
|3,913,601.37|
|16,163,190.70|

 5.23 Other payables
5.23.1 Presentation of other payables by aging
||
|-|
|Balance as at December31, 2016|
|36,135,896.36|
|1,238,802.40|
|480,300.00|

Notes to the Financial Statements Page 55
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||
|-|
|2,838,889.88|
|40,693,888.64|

 5.23.2 Other payables are classified by nature
Property of account receivable Book balance as at December 31, 2016 Margin and so on 1,365,000.00 Other temporary payments/Other to be paid 6,641,963.26 Other receivables from the related parties 32,686,925.38 Total 40,693,888.64 5.24 Non-current liabilities maturing within one year
||
|-|
|Balance as atDecember 31, 2016|
|36,100,000.00|

 5.25 Long-term borrowings
||
|-|
|Balance as at December 31, 2016|
|48,590,000.00|

 5.26 Share capital
|||||||
|-|-|-|-|-|-|
|Balance as atJanuary 1,2016|Increase ("+") /decrease ("-") for the current year|||||
||Issuanceof newshares|Sharedonation|Share convertedfrom public reservefunds|Others|Sub-total|
|119,375,000.00||||||

 5.27 Capital reserve
||||
|-|-|-|
|Balance as atJanuary 1,2016|Increase in2016|Decrease in2016|
|344,407,741.07|||
|614,157,553.22|||
|958,565,294.29|||

5.28 Other comprehensive income
Notes to the Financial Statements Page 56
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
|||||||
|-|-|-|-|-|-|
|Balance asat January1, 2016|Year 2016|||||
||Accrual beforeincome tax forthe currentyear|Less: recognizedas othercomprehensiveincome forprevious yearsand transferred inthe profit or lossfor the currentyear|Less:income taxexpenses|Attributable toowners of theparentcompany|Attributable tominorityshareholders|
|9,800.00||||||
|9,800.00||||||
|9,800.00||||||

5.29 Surplus reserves
||||
|-|-|-|
|Balance as atJanuary 1, 2016|Increase in2016|Decrease in2016|
|56,724,000.00|||
|68,962,000.00|||
|125,686,000.00|||

 5.30 Retained earnings
||
|-|
|Year 2016|
|-947,520,008.78|
|-947,520,008.78|
|12,267,006.14|

Notes to the Financial Statements Page 57
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||
|-|
|-935,253,002.64|

 5.31 Operating income and operating costs
||||
|-|-|-|
|Year 2016|||
|Income|Cost|Income|
|853,753,015.06|703,873,587.79|1,273,920,141.82|
|19,533,471.69|8,851,360.59|67,411,769.11|
|873,286,486.75|712,724,948.38|1,341,331,910.93|

 Primary businesses (by product)
||||
|-|-|-|
|Year 2016|||
|Operating income|Operating cost|Operating income|
|8,335,299.07|8,800,544.94|522,989,115.46|
|845,417,715.99|695,073,042.85|750,931,026.36|
|853,753,015.06|703,873,587.79|1,273,920,141.82|

 5.32 Taxes and surcharges
||
|-|
|Year 2016|
|163,611.07|
|2,253,598.66|
|1,633,478.75|
|994,771.11|
|563,868.60|
|656,593.82|
|2,520.00|
|6,268,442.01|

 5.33 Selling expenses
||
|-|
|Year 2016|
|4,565,759.91|
|65,732.14|
|105,404.38|
|13,646.99|

Notes to the Financial Statements Page 58
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||
|-|
|7,875,372.79|
|45,357.70|
|19,384.30|
|33,545.57|
|64,335.85|
|1,269,801.20|
|1,305,765.64|
|7,936,456.81|
|3,586,861.32|
|542,154.33|
|27,429,578.93|

 Remark: This year's sales expenses have changed significantly compared with the previous year, mainly because of the restructuring of the Company in the previous year and the changes about the scope of consolidation this year.
5.34 General and administrative expenses
||
|-|
|Year 2016|
|41,022,640.62|
|5,437,380.56|
|964,276.57|
|554,416.10|
|125,855.84|
|203,181.50|
|1,509,234.54|
|634,754.60|
|10,987,649.08|
|2,716,609.67|
|1,148,608.26|
|730,368.12|
|342,255.28|
|191,657.98|
|853,600.60|
|472,903.57|
|9,145,607.45|
|77,041,000.34|

Remark: This year's General and administrative expenses have changed significantly compared with
the previous year, mainly because of the restructuring of the Company in the previous year and the
changes about the scope of consolidation this year.
Notes to the Financial Statements Page 59
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
5.35 Financial expenses
||
|-|
|Year 2016|
|40,654,224.57|
|4,743,121.77|
|-204,402.48|
|888,822.01|
|36,595,522.33|

 5.36 Losses from asset impairment
||
|-|
|Year 2016|
|341,283.56|
|341,283.56|

 5.37 Investment income
||
|-|
|Year 2016|
|3,128,796.18|
|3,128,796.18|
|3,128,796.18|

 5.38 Non-operating income
||||
|-|-|-|
|Year 2016|Year 2015|Amounts included inthe non-recurrentprofit and loss forthe current year|
||3,426,624.42||
||3,426,624.42||

Notes to the Financial Statements Page 60
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||||
|-|-|-|
|1,223,200.00|3,643,800.00|1,223,200.00|
|36,715.28|4,348,319.37|36,715.28|
|1,259,915.28|11,418,743.79|1,259,915.28|

 Government subsidies included in current profit and loss
||
|-|
|Year 2016|
|10,000.00|
|266,000.00|
|328,200.00|
|219,000.00|
|400,000.00|
|1,223,200.00|

 5.39 Non-operating expenses
||||
|-|-|-|
|Year 2016|Year 2015|Amounts included inthe non-recurrentprofit and loss forthe current year|
|3,646.70|434,139.22|3,646.70|
|3,646.70|434,139.22|3,646.70|
|1,956,225.38|271,183.91|1,956,225.38|
|1,959,872.08|705,323.13|1,959,872.08|

5.40 Income tax expenses
||
|-|
|Year 2016|
|2,606,123.70|

Notes to the Financial Statements Page 61
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||
|-|
|2,767.77|
|2,608,891.47|

 5.41 Items of the statement of cash flows
5.41.1 Cash received from other operating activities
||
|-|
|Year 2016|
|1,223,200.00|
|2,178,105.80|
|3,401,305.80|

 5.41.2 Cash paid for other operating activities
||
|-|
|Year 2016|
|24,773,234.35|

 5.41.3 Cash paid from other financing activities
||
|-|
|Year 2016|

 5.41.4 Cash received from other financing activities
||
|-|
|Year 2016|
|1,601,195,893.08|
|31,449,622.92|
|3,436,525.12|
|1,636,082,041.12|

 5.41.5 cash paid for other financing activities
||
|-|
|Year 2016|
|478,625,549.97|
|874,602,000.00|
|1,353,227,549.97|

 5.42 Supplementary information to the statement of cash flows
5.42.1 Supplementary information to the statement of cash flows
||
|-|
|Year 2016|

Notes to the Financial Statements Page 62
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||
|-|
|Year 2016|
|12,705,659.11|
|341,283.56|
|35,348,403.60|
|730,368.12|
|1,454,503.20|
|3,646.70|
|37,217,699.45|
|-3,128,796.18|
|2,767.77|
|-54,856,096.20|
|49,283,231.77|
|29,516,448.12|
|108,619,119.02|
|273,768,758.46|
|23,643,515.81|
|250,125,242.65|

5.42.2 Breakdowns of cash and cash equivalents:
Balance as at Balance as at January
Item
December 31, 2016 1, 2016
Notes to the Financial Statements Page 63
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||
|-|
|Balance as atDecember 31, 2016|
|273,768,758.46|
|31,205.34|
|273,737,553.12|
|273,768,758.46|

5.43 Assets with restrictions on their ownership or use right
||
|-|
|Book value as atDecember 31, 2016|
|240,646,064.11|
|4,503,797.79|
|2,743,046.64|

6. Change in the scope of business combinations
The consolidation scope of the current period has not changed.
7. Equity in other entities
7.1 Equity in subsidiaries
7.1.1 Constitution of enterprise group
||||||
|-|-|-|-|-|
|Domicile of primaryoperation|Registeredplace|Business nature|Shareholding ratio (%)||
||||Directly|Indirectly|
|Chongqing|Chongqing|Domestic sales ofmotorcycles and therelevant accessories|100.00||

Notes to the Financial Statements Page 64
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
|||||
|-|-|-|-|
|Domicile of primary|Registered|Business nature|Shareholding ratio (%)|
|operationShanghai|placeShanghai|Domestic sales ofmotorcycles and therelevant accessories|51.00|

 7.1.2 Significant non-wholly-owned subsidiaries
||||
|-|-|-|
|Shareholdingratio of minorityshareholder (%)|Profits or lossesattributable tominorityshareholders forthe current year|Dividendsdeclared to bedistributed tominorityshareholders forthe current year|
|49.00%|438,652.97||

Notes to the Financial Statements Page 65
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
7.1.3 Major financial information on significant non-wholly-owned subsidiaries
Balance as at December 31, 2016
||||||
|-|-|-|-|-|
|Current assets|Non-current assets|Total assets|Current liabilities|Non-currentliabilities|
|5,982,241.44|7,443,928.95|13,426,170.39|10,935,791.32||

Balance as at December 31, 2016
||||||
|-|-|-|-|-|
|Current assets|Non-current assets|Total assets|Current liabilities|Non-currentliabilities|
|8,774,355.60|7,988,928.55|16,763,284.15|15,168,115.23||

||||||||
|-|-|-|-|-|-|-|
|Year 2016|||||||
|Operating income|Net profit|Totalcomprehensiveincome|Net cash flow fromoperating activities|Operating income|Net profit|Total comprehensiveincome|
|14,652,907.39|895,210.15|895,210.15|3,715,490.00|15,815,170.11|398,609.91|398,609.91|

 7.2 Transactions through which the Company's shares of owner's equity in subsidiaries are changed but it still has control over the subsidiaries. The shares held by the Company in its subsidiaries' owners' equity have not been changed in the current year.
7.3 Equity in joint ventures and associates
7.3.1 Major joint ventures and associates
|||||
|-|-|-|-|
|Domicile of primary|Registered place|Business nature|Shareholding ratio (%)|

Notes to the Financial Statements Page 66
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||||||
|-|-|-|-|-|
|operation|||Directly|Indirectly|
|Chongqing|Chongqing|Production and sales ofmotorcycles and the relevantaccessories|49.00||

Notes to the Financial Statements Page 67
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
7.3.2 Major financial information on significant joint ventures
||
|-|
|Balance as at December 31, 2016/ Year 2016|
|Chongqing Pingshan TK Carburettor Co., Ltd.|
|171,159,279.38|
|98,235,139.01|
|24,433,588.43|
|195,592,867.81|
|25,841,618.24|
|25,841,618.24|
|169,751,249.57|
|83,178,112.31|
|83,178,112.31|
|121,504,742.74|
|-3,157,249.24|
|1,472,946.94|
|6,613,730.25|

Notes to the Financial Statements Page 68
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||
|-|
|6,613,730.25|
|3,332,000.00|

Notes to the Financial Statements Page 69
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
7.3.3 There are no significant restrictions on the joint ventures or associates' ability to transfer funds to the Company.
8. Risks relating to the financial instruments
Liquidity risk
The liquidity risk refers to the risk of capital shortage in the case that an enterprise performs its obligation to settle in cash or with other financial assets. The Company's policy is to ensure sufficient cash for repayment of due debts. The liquidity risk is under the centralized control of the finance department of the Company. The department of finance, on the strength of supervision of balance of cash, negotiable securities that can be converted into cash at anytime and rolling forecast of cash flows in the future 12 months, makes sure that the Company has sufficient cash to repay debts under all circumstances that can be predicted in a reasonable manner.
The financial liabilities of the Company are presented by undiscounted contracted cash flow on the maturity date as follows:
Balance as at December 31, 2016
|||||
|-|-|-|-|
|Within 1 month|1 to 3 months|3 months - 1year|1-5 years|
|20,000,000.00||204,500,000.00||
|142,140,000.00|314,280,000.00|262,140,000.00||
||185,057,014.26|8,311,471.19||
|1,000,000.00|1,000,000.00|34,100,000.00||
||||48,590,000.00|
|163,140,000.00|500,337,014.26|509,051,471.19|48,590,000.00|

 Balance as at December 31, 2015
|||||
|-|-|-|-|
|Within 1 month|1 to 3 months|3 months - 1year|1-5 years|
|||217,000,000.00||
|109,885,000.00|358,560,000.00|292,110,000.00||
|24,764,163.49|22,486,045.02|28,635,117.32||
|1,500,000.00|3,000,000.00|70,500,000.00||
||||128,490,000.00|
|136,149,163.49|384,046,045.02|608,245,117.32|128,490,000.00|

Notes to the Financial Statements Page 70
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
9. Related parties and related party transactions
9.1 The parent company of the Company
|||||
|-|-|-|-|
|Registeredplace|Business nature|Registeredcapital|Shareholdingratio in theCompany (%)|
|Chongqing|Design and sales ofMotorcycles andaccessories|RMB180.30billion|71.13|

Remark: after the restructuring, the shareholder changes to Jianshe mechanical and electrical co, CSGS is still the actual controllers which has not be changed, and the ultimate controller of the Company is The State-owned Assets Supervision and Administration Commission of the State Council.
9.2 Subsidiaries of the Company
See the Note 7 Equity in Other Entities for the details of subsidiaries of the Company
9.3 The joint ventures and associates of the Company
See the Note 7 Equity in Other Entities for the details of major joint ventures or associates of the Company.
The related party transactions with the Company for the current year:
Name of joint venture or associate Relationship with the company Chongqing Pingshan TK Carburettor Co., Ltd.("Pingshan TK") Joint venture
Chongqing Tongsheng Machinery Co., Ltd.("Tongsheng Original associates venture, now associates of Jianshe") parent company
Original associates venture, now associates of Chongqing Fuyeda Property Management Co., Ltd.("Fuyeda") parent company
9.4 Other related parties of the Company
Name of other related parties Relationship with the Company
Chongqing Jianshe Industrial (Group) Co., Ltd. ("Jianshe
industry ") Under the common control of the same party
South Finance Co., Ltd. ("Finance Company ") Under the common control of the same party
Notes to the Financial Statements Page 71
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
Name of other related parties Relationship with the Company Chongqing Changan Motor Joint Stock Limited Company
("Changan Motor ") Under the common control of the same party Chongqing Changan Automobile Co., Ltd. Beijing
Under the common control of the same party Changan Automobile Company(―BeijingChangan―)
Chongqing Changan Suzuki Motor Co., Ltd. ("Changan An Joint venture a subsidiary of a controlling Suzuki ") shareholder
Hebei Changan Motor Co., Ltd. ("Hebei Changan ") Under the common control of the same party Nanjing Changan Motor Co., Ltd. ("Nanjing Changan ") Under the common control of the same party Baoding Changan Bus Manufacturing Co., Ltd(―Baoding
Under the common control of the same partyChangan―)
Hefei Changan Motor Co.Ltd(―HefeiChangan’) Under the common control of the same party Chongqing Changan Motor Customer Service Co., Ltd.
("Changan Motor Customer Service ") Under the common control of the same party Chongqing Changan Automobile International Sales&
Under the common control of the same party Service Co.,Ltd（―Changan Automobile sales―）
Chongqing North Construction import and export trade
co.ltd(―import and exportcompany‖) Under the common control of the same party Chongqing jianshe sales co.Ltd(―the salescompany‖) Under the common control of the same party Hafei Motor sharecompany(―Hafeimotor‖) Under the common control of the same party Changan Ford Motor Co.Ltd Harbin branch(―Changan An Joint venture a subsidiary of a controlling Ford Harbinbranch‖) shareholder
Harbin dongan Motor Power shares Co.Ltd(―Harbin
donganpower‖) Under the common control of the same party 9.5 Related party transactions
9.5.1 Purchase of goods, rendering and receipt of labor services
Table of purchase of goods / receipt of services
|||
|-|-|
|Content of related partytransactions|Year 2016|
|Service|487,290.25|
|Energy, service and equipment dieand mould|1,900,438.50|
|Receipt of maintenance|3,131,523.69|
|Receipt of maintenance andpurchase of accessories|457,762.65|
|Receipt of maintenance|8,335.94|
|Receipt of maintenance|64,634.97|
|Receipt of maintenance|605.38|

Notes to the Financial Statements Page 72
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
|||
|-|-|
|Acting import service fee|542,669.46|
|Purchasing materials andequipment|57,055,082.38|
|Purchasing parts and others|31,055,689.00|

Table of sales of goods/rendering of services
|||
|-|-|
|Content of related partytransactions|Year 2016|
|Finished products|115,634,903.45|
|Finished products|980,930.76|
|Finished products|45,118,330.18|
|Finished products|26,127,058.88|
|Finished products|67,851,049.78|
|Finished products|8,318,694.42|
|Finished products|242,580.34|
|Finished products|212,820.51|
|Finished products|3,568.38|

2、 The situation of related-party lease
The Company as a lessor:
|||
|-|-|
|The kind of leased assets|Rental income of2016|
|Fixed assets|9,287,626.08|

The Company as alessee：
|||
|-|-|
|The kind of leased assets|Leasing asset of2016|
|Fixed assets|2,262,810.82|

9.5.3 Related Guarantee
(Unit: RMB'0,000)
|||||
|-|-|-|-|
|Guarantee|Guaranteedamount|Starting dateof guaranty|Maturity dateof guaranty|
|The Air-conditioner Company|5,000|2016-8-25|2017-8-24|
|The Air-conditioner Company|3,500|2016-7-25|2017-1-25|
|The Air-conditioner Company|2,857|2016-8-24|2017-2-24|

Notes to the Financial Statements Page 73
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
|||||
|-|-|-|-|
|The Air-conditioner Company|2,075|2016-10-18|2017-4-18|
|The Air-conditioner Company|1,567|2016-10-18|2017-4-18|
|The Air-conditioner Company|3,571|2016-11-29|2017-5-28|
|The Air-conditioner Company|3,571|2016-12-6|2017-6-6|
|The Air-conditioner Company|1,000|2016-7-12|2017-1-12|

 9.5.4 Key executive compensation
||
|-|
|Year 2016|
|1,778,863.70|

 9.5.5 Other related transactions
The financial businesses with Finance Company
||
|-|
|Trading unit|
|Chongqing Jianshe Motorcycle|
|The Air-conditioner Company|
|Sub-total|
|Chongqing Jianshe Motorcycle|
|Chongqing Jianshe Motorcycle|
|The Air-conditioner Company|
|The Air-conditioner Company|
|Chongqing Jianshe Motorcycle|
|Chongqing Jianshe Motorcycle|
|The Air-conditioner Company|
|Sub-total|

 9.6 Accounts due from/to the related parties
9.6.1 Accounts receivable
|||||
|-|-|-|-|
|Related party|Balance as at December 31, 2016|||
||Book balance|Provision forbad debts|Book balance|
|Changan Motor|18,330,476.86||24,772,382.35|

Notes to the Financial Statements Page 74
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
|||||
|-|-|-|-|
|Harbin Changan Ford|502,331.41||9,675,399.65|
|Changan Suzuki|8,414,220.51||5,526,035.47|
|Nanjing Changan|14,225,651.46||327,320.00|
|Hebei Changan|22,387.00||31,562.00|
|Hefei Changan|17,250,797.26||5,801,891.42|
|Hafei Motor|3,999,944.43|1,350,812.50|3,999,944.43|
|Harbin dongan Power|3,508.41|350.84|42,017.99|
|Baoding Changan|12,150.01|||
|Jianshe mechanicaland electrical co.|||248,608,670.53|
|Import Company|||621,678.71|

9.6.2 Accounts payable
|||
|-|-|
|Related party|Book balance as atDecember 31, 2016|
|Tongsheng Jianshe|2,510,396.87|
|Jianshe Industry|165,560.97|
|Jianshe Industry|1,138,825.73|
|Jianshe mechanical andelectrical co.|31,449,622.92|
|Fuyeda|282,533.47|

 10. Commitments or contingencies
10.1 Significant commitment events
As of December 31, 2016, the Company did not need to disclose important commitments. 10.2 Contingencies
As of December 31, 2016, there was a commercial acceptance bill with endorsement and not yet due at the balance sheet date, amounting to RMB13,835,000.00.
11. Post balance sheet events
The company received the China Securities Depository Co., Ltd. Shenzhen Branch shares frozen data
on April 13, 2017, the company's controlling shareholder of Jianshe mechanical and electrical co
Notes to the Financial Statements Page 75
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
holdings of the Company 5,000,000 shares, due to debt disputes by the Chongqing Banan District People's Court in 2017 April 12 Judicial freeze. Jianshe mechanical and electrical co holds 84,906,250 shares of the Company, accounting for71.13% of the total share capital of the Company. The Company's shares were frozen by 5,000,000 shares, accounting for4.19% of the total share capital of the Company.
12. Other significant events
As of December 31, 2016, the Company did not need to disclose other important matters.
Notes to the Financial Statements Page 76
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
13 Notes to the main items of financial statements of parent company
13.1 Accounts receivable
13.1.1 Disclosure of accounts receivable by category
||||||||||
|-|-|-|-|-|-|-|-|-|
|Balance as at December 31, 2016|||||||||
|Book balance||Provision for bad debts||Book value|Book balance||Provision for bad debts||
|Amount|Proportion (%)|Amount|Proportion (%)||Amount|Proportion (%)|Amount|Proportion (%)|
|1,733,097.58|100.00|1,728,790.48|99.75|4,307.10|2,255,130.24|100.00|1,727,559.88|76.61|
|1,733,097.58|100.00|1,728,790.48|99.75|4,307.10|2,255,130.24|100.00|1,727,559.88|76.61|

Notes to the Financial Statements Page 77
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
Accounts receivable with provision for bad debts made using the aging analysis method among those portfolios:
Balance as at December 31, 2016
Aging
|||
|-|-|
|Accounts receivable|Provision for bad debts|
|6,153.00|1,845.90|
|1,726,944.58|1,726,944.58|
|1,733,097.58|1,728,790.48|

13.1.2 Accounts receivables provided, reversed or recovered in the report year.
The provision for bad debts is RMB 1,230.60 for the current year.
13.1.3 Top five accounts receivable by the credit balance as at December 31, 2016
The top five accounts receivable by the credit balance as at December 31, 2016 total RMB 1,327,813.35, accounting for76.62% of total amount of balance as at December 31, 2016 of accounts receivable, and the balance as at December 31, 2016 of provision for bad debts provided correspondingly totals RMB 1,327,813.35.
13.2 Other receivables
13.2.1 Disclosure of other receivables by category
||||||
|-|-|-|-|-|
|Balance as at December 31, 2016|||||
|Book balance|Provision for bad debts|Book value|Book balance|Provision for bad debts|

Notes to the Financial Statements Page 78
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||||||||||
|-|-|-|-|-|-|-|-|-|
|Amount|Proportion (%)|Amount|Proportion (%)||Amount|Proportion (%)|Amount|Proportion (%)|
|9,425,174.24|96.31|4,403,827.20|46.72|5,021,347.04|257,837,987.95|99.84|4,232,368.84|1.64|
|361,125.35|3.69|361,125.35|100.00||405,125.35|0.16|405,125.35|100.00|
|9,786,299.59|100.00|4,764,952.55|48.69|5,021,347.04|258,243,113.30|100.00|4,637,494.19|1.80|

Notes to the Financial Statements Page 79
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
Other receivables with provision for bad debts made using the aging analysis method among those portfolios:
Balance as at December 31, 2016
|||
|-|-|
|Other receivables|Provision for baddebts|
|3,494,779.52||
|1,696,186.13|169,618.61|
|4,234,208.59|4,234,208.59|
|9,425,174.24|4,403,827.20|

13.2.2 Provision for bad debts provided, reversed or recovered in the current year. The provision for bad debts is decreased by RMB 127,458.36 in the current year. 13.2.3 Other receivables classified by payment properties
||
|-|
|Book balance as atDecember 31, 2016|
|667,041.51|
|4,523,924.14|
|4,595,333.94|
|9,786,299.59|

 13.2.4 Top five other receivables by credit balance as at December 31, 2016
The top five other recievables by the credit balance as at December 31, 2016 total RMB 8,207,661.96, accounting for 83.87% of total amount of balance as at December 31, 2016 of other receivable, and the balance as at December 31, 2016 of provision for bad debts provided correspondingly totals RMB 3,857,499.33.
13.3 Long-term equity investments
||||||
|-|-|-|-|-|
|Balance as at December 31, 2016|||||
|Book balance|Provision forimpairment|Book value|Book balance|Provision forimpairment|

Notes to the Financial Statements Page 80
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||||
|-|-|-|
|168,160,000.00|168,160,000.00|168,160,000.00|
|83,178,112.31|83,178,112.31|83,381,316.13|
|251,338,112.31|251,338,112.31|251,541,316.13|

 13.3.1 Investments in subsidiaries
||||||
|-|-|-|-|-|
|Balance as atJanuary 1,2016|Increase in2016|Decreasein 2016|Balance as atDecember 31,2016|Provisionforimpairmentin 2016|
|8,160,000.00|||8,160,000.00||
|160,000,000.00|||160,000,000.00||
|168,160,000.00|||168,160,000.00||

Notes to the Financial Statements Page 81
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
13.3.2 Investments in associates and joint ventures
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Balance as atJanuary 1,2016|Increases/decreases in the current year|||||||Balance as atDecember 31, 2016|Provisionforimpairmentin 2016|
||Additionalinvestment|Decrease ininvestment|profits and losseson investmentsrecognized underthe equity method|Othercomprehensive income|Changesin otherequity|Declaration ofcash dividends orprofits|Others|||
|83,381,316.13|||3,128,796.18|||-3,332,000.00||83,178,112.31||

Notes to the Financial Statements Page 82
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
13.4 Operating income and operating costs
||||
|-|-|-|
|Year 2016|||
|Income|Cost|Income|
|||373,805,672.47|
|610,825,517.52|577,514,305.99|542,719,201.58|
|610,825,517.52|577,514,305.99|916,524,874.05|

 13.5 Investment income
||
|-|
|Year 2016|
|3,128,796.18|
|3,128,796.18|

 14. Supplementary information
14.1 Detailed statement of current non-recurring profit and loss
||
|-|
|Amount|
|-3,646.70|
|1,223,200.00|

Notes to the Financial Statements Page 83
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||
|-|
|Amount|
|-1,919,510.10|
|29,247.81|

Notes to the Financial Statements Page 84
CHONGQING JIANSHE MOTORCYCLE CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
||
|-|
|Amount|
|29,286.15|
|-641,422.84|

14.2 Rate of return on net assets and earnings per share:
|||
|-|-|
|Weightedaverage rate ofreturn on netassets (%)||
||Basicearnings pershare|
|4.68|0.103|
|4.92|0.108|

Chongqing Jianshe Motorcycle Co., Ltd. April 25, 2017
Notes to the Financial Statements Page 85