Company: ZHIHF
Filing Date: 2025-04-15
Form Type: 20-F
Source: 0001410578-25-000729
Chunk: 340

Company: Zhihu Inc.
Filing Date: 2025-04-15
Form: 20-F
Item: Item 5
Chunk 340
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 estimating expected credit losses requires a number of assumptions about matters that are uncertain. Changes in assumptions affect general and administrative expenses on our consolidated statements of operations and comprehensive loss and the allowance for expected credit losses contained within trade receivables on our consolidated balance sheets. See Note 2 to our audited consolidated financial statements included elsewhere in this annual report for more information regarding expected credit losses.
Nature of Estimates Required. We estimate the allowance for expected credit losses on receivables that share similar risk characteristics based on a collective assessment using measurement models. The models vary by portfolio groups and consider factors such as historical trends in credit losses, external credit evaluations, and forward-looking macroeconomic conditions.
Assumptions Used. The key assumptions used in the process of estimating the allowance for expected credit losses include:
Portfolio groups: In evaluating financial assets on a collective basis, we aggregate financial assets on the basis of similar risk characteristics, which include a combination of size, type of the services or the products we provide.
Historical default rate: The percentage of non-payment or default on receivables over an extended time period. In determining historical loss rate, we consider historical collectability based on past due status, the age of the trade receivables balances, credit quality of customers based on ongoing credit evaluations; and
Forward-looking information incorporated in the expected credit losses models: The impact of economic indicators on loss rate varies to different. We comprehensively consider internal and external data, future forecasts and statistical analysis to determine the relationship between economic indicators with loss rate. We evaluate and forecast economic indicators at least annually at balance sheet date, and regularly evaluates the results based on changes in macroeconomics.
Sensitivity Analysis. When one of our estimates of historical default rate and forward-looking information decreased/increased by 1% while holding all other estimates constant, there would be no significant impact to our consolidated financial statements.
Goodwill Impairment Assessment
We conduct an impairment test as of December 31 annually, or more frequently if events or changes in circumstances indicate that the carrying value of goodwill might be impaired. Our goodwill was attributable to our company as a whole. A quantitative assessment is performed if we determine it is more likely than not that the carrying value of the net assets is more than the fair value of the reporting unit after the qualitative assessment. Fair value is estimated by us using the income approach. Key assumptions utilized in estimating the fair value of the reporting unit include revenue growth rates, profit margins and discount rate. Changes in these assumptions could materially affect the determination of the fair value