(o) Revenue recognition On January 1, 2018, the Company adopted the revenue recognition standard using the modified retrospective transition method to those contracts which were not completed as of January 1, 2018. Results for periods beginning after January 1, 2018 are presented under ASC Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with historic accounting under ASC Topic 605. Upon initial adoption, the Group recognized the cumulative effect of initially applying the revenue standard as an increase of approximately US$5 million (RMB33 million) , net of tax, to the opening balances of retained earnings. These adjustments primarily arose from the timing of revenue recognition for transaction fees collected in monthly instalments related to our loan products being recognized earlier under ASC Topic 606. . Consistent with the criteria of ASC 606 Revenue from Contracts with Customers, the Group recognizes revenue by applying the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to performance obligations in the contract; and (v) recognize revenue when (or as) performance obligations are satisfied. Revenue recognition policies for each type of services under ASC Topic 606 are discussed as follows: Marketplace lending servicesLifestyle loans The Group generates transaction and service fees by providing marketplace lending services to the users of its lending marketplace. The Groups services consist of: a) matching marketplace investors to potential qualified borrowers and facilitating the execution of loan agreements between the parties (referred to as loan matching); b) providing repayment processing services for the marketplace investors over the loan term, including following up on late repayments (referred to as loan repayment services); and, c) management of the Safeguard Program. The Group determined that it is not the legal lender and legal borrower in the loan origination and repayment process. Accordingly, the Group does not record loans receivable and payable arising from the loans between the marketplace investors and the borrowers. The Group has determined that the marketplace lending transactions contain the following multiple elements: loan matching; loan repayment services and the Safeguard Program. The Group has determined that both marketplace investors and borrowers are its customers. It receives payments from borrowers at loan inception and from marketplace investors over the term of the loan. In the case of loans for which investors have opted into the Safeguard Program, a portion of the amount received on such loan from both the marketplace investors and borrowers is allocated to the Safeguard Program in accordance with ASC Topic 460, Guarantees at fair value, including a margin . The remaining amount from investors is allocated to loan matching and loan repayment services using best estimated selling price, as neither vendor specific objective evidence nor third party evidence of selling price is available. However, as the revenue for both of these services is recognized upon repayments, there would be no impact to timing or the amount of revenue recognized if the amounts were allocated. Accordingly, the use of any best estimated selling price for these two services is not necessary. Transaction revenue is recognized for loan matching from borrowers at loan inception. Revenue earned from investors for loan matching and loan repayment services is recognized over the term of the loan as cash is received. Revenue from management of the Safeguard Program is recognized ratably over the term of the loan. Marketplace lending servicesConsumption loans The Group, through Haidong CRF Micro-credit, launched Consumption loans at the beginning of 2015. These are short-term loans that are made through the technology mobile platform with terms generally less than three months and loan principal generally of up to RMB506 (approximately US$74). The Groups services consist of: a) matching marketplace investors to potential qualified borrowers and facilitating the execution of loan agreements between the parties (referred to as loan matching); b) providing repayment processing services for the marketplace investors over the loan term, including following up on late repayments (referred to as loan repayment services). The Group determined that it is not the legal lender or borrower in the loan origination and repayment process. Accordingly, the Group does not record loans receivable and payable arising from the loan between the marketplace investor and the borrower. The Group has determined that the Consumption loan transactions contain the following two elements: loan matching and loan repayment services, both of which are provided to the marketplace investor, who is considered the Groups customer for Consumption loans. Although the Group provides loan matching service at loan inception and repayment service when the loan is due, the collection of both service fees is contingent upon actual repayments from the borrowers. Accordingly, the Group recognizes service fees relating to Consumption loans upon repayment by the borrowers. Starting from December 2017, the Group changed its servicing model and agreement terms for consumption loans. In addition to loan matching and loan repayment services, the Group also provides credit assessment service to borrowers. The credit assessment services are provided before any loan is granted to the borrower, the fees collected for the credit assessment services is recognized throughout the designated period for which the assessment result is valid. While although the Group provides loan matching service at loan inception and repayment service when the loan is due, the collection of both service fees is contingent upon actual repayments from the borrowers. Accordingly, the Group recognizes service fees relating to Consumption loans upon repayment by the borrowers. The following table summarizes the Groups transaction and service fees (net of customer acquisition incentive) recognized for lifestyle loans and consumption loans during the year ended December 31, 2016, 2017 and 2018: For the Year Ended December 31, 2016 2017 2018 US$000 US$000 US$000 Lifestyle loans 54,962 46,752 47,722 Consumption loans (net of customer acquisition incentive) 929 44,869 22,893 Transaction and service fees, net 55,891 91,621 70,615 Incentives to investors In order to incentivize investors, the Group provides incentives to marketplace investors, who commit a certain amount of money to the consumption loan program for a period of time, which is determined based on the total number of first time borrowers for each period. Such cash incentives are accrued as they are earned by the marketplace investors and are accounted for as a reduction of revenue in accordance with ASC subtopic 605-50. When recording these incentives as a reduction in revenue results in negative revenue for a marketplace investor on a cumulative basis, the cumulative shortfall is re-characterized as an expense in accordance with ASC 605-50-45-9 given the inherent uncertainties with the consumption loan program which may not result in sufficient probable future revenue to the Group to recover such shortfall. Gross billings on transaction and service fee is defined as transaction and service fee billed to customers, inclusive of related value added tax, before deduction of customer acquisition incentives For the Year Ended December 31, 2016 2017 2018 US$000 US$000 US$000 Gross billings on transaction and service fee Lifestyle loans 58,138 49,772 68,163 Consumption loans 9,763 87,410 52,819 Total 67,901 137,182 120,982 Customer acquisition incentive deducted from Consumption loan revenue 8,364 38,081 14,583 recognized in Sales and marketing expenses 673   deducted from Lifestyle loans revenue   28,936 Total 9,037 38,081 43,519 Micro-credit lending business The Group recognizes interest income on loans using the effective interest method over the loan period. Interest income is not recorded when reasonable doubt exists as to the full, timely collection of interest or principal. Interest income is included in other revenue in the consolidated statements of comprehensive income (loss). Contract balances Contract assets represent the Groups right to consideration in exchange for facilitation and post-facilitation service that the Company has transferred to the customer before payment is due. Contract liabilities represent the Groups obligation to transfer facilitation and post-facilitation service to the customer due to received payment. The timing of revenue recognition, scheduled payments, and cash collections results in contract assets and contract liability .