(g) Revenue recognition Periods prior to January 1, 2018 Prior to January 1, 2018, the Groups revenues are principally derived from the provision of testing services and online education services. The Group recognizes revenues when all of the following have occurred:  persuasive evidence of an agreement with the customer exists;  services have been performed and/or delivery of goods has occurred;  the fees for services performed and/or price of goods sold are fixed or determinable; and  collectability of the fees and/or sales proceeds is reasonably assured. Application of the above criteria for revenue recognition for each type of service or product is as follows: i) Testing services Fees for testing services are recognized upon the completion of the exam by the test taker since the Group has no significant future involvement after the completion of the examination. Fees received in advance of test delivery are recorded as deferred revenue. ii) Online education services The Group provides an online platform for students to conduct continuing education. The platform entitles students to access online education services during a specified service period (the subscription period). Service fees are initially recorded as deferred revenue and are recognized as revenue on a straight-line basis over the subscription period. iii) Other revenue a) Licensing fees from authorized test centers The Group receives a fixed fee for a perpetual license that provides authorized test centers the right to use the Groups brand name and e-testing platform. The Group is obligated to provide training and support to authorized test centers staff. Fixed fees for perpetual licenses are recognized on a straight-line basis over the expected licensing period of 10 years, which is the period the Group is expected to have continuing involvement with the authorized test centers. Management estimates the expected licensing period based on its historical retention experience, factoring in the expected level of future competition, the risk of technological obsolescence, technological innovation, and expected changes in the education training environment. b) Test development services Test development service fees are recognized upon the acceptance of the developed tests by the customer. The period to develop the tests is short, generally within two to six months from commencement of development. c) Test administration products Test administration products sales are recognized upon delivery and when collectability is reasonably assured. d) Operating leases The Group recognized the revenue from operating lease on a straight-line basis over the lease term. Periods commencing January 1, 2018 Since the adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606) starting from January 1, 2018, the Group recognizes revenues upon the satisfaction of its performance obligation (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which the Group expects to be entitled to in exchange for those goods or services, excluding amounts collected on behalf of third parties (for example, value added taxes). For each performance obligation satisfied over time, the Group recognizes revenue over time by measuring the progress toward complete satisfaction of that performance obligation. If the Group does not satisfy a performance obligation over time, the performance obligation is satisfied at a point in time. Revenues generated from ATA Online Business, which primarily include testing services and online education services have been classified and reported under discontinued operations for all the periods presented. Refer to note 21. i) Testing services The Group derives revenues by providing testing services to the test takers for customers. Testing services revenues are recognized upon the completion of the exam by the test takers when the control over the service has been transferred to customers. ii) Online education services The Group provides an online platform for students to conduct continuing education. The platform entitles students to access online education services during a specified service period (the subscription period). The Group determines that the customer simultaneously receives and consumes benefits provided by the Groups performance as the Group performs during the term of the contract and the earning process is straight-line. Service fees are initially recorded as deferred revenue and are recognized as revenue on a straight-line basis over the subscription period. iii) K12 education assessment services The Group derives revenues by providing the assessment reports for the test takers to customers. Revenues from education assessment services are recognized when the Group delivers the reports to customers, which is when the control over the report has been transferred to customers. Fees received in advance are recorded as deferred revenue, which is recognized when the Group has an obligation to transfer goods or services to a customer for which the Group has received consideration. iv) Other revenue a) Content development revenue The Group derives content development revenue by designing test model and providing the developed content to customers. Revenues from content development are recognized when the Group delivers the developed content to customers, which is when the control over the contents has been transferred to customers. v) Value added tax (VAT) Revenue is recognized net of VAT. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the consolidated balance sheets until paid to the tax authorities.