Company: KPEA
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002124
Chunk: 556

Company: Kun Peng International Ltd.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 1
Chunk 556
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ivables on gross sales from customers.

The
Company adopted Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts with Customers (Topic 606)”
(“ASU 2014-09”) using the full retrospective transition method. The Company’s adoption of ASU 2014-09 did not have
a material impact on the amount and timing of revenue recognized in its consolidated financial statements.

91

The
Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its
obligations under each of its agreements:

    ●
    identify
    the contract with a customer;

    ●
    identify
    the performance obligations in the contract;

    ●
    determine
    the transaction price;

    ●
    allocate
    the transaction price to performance obligations in the contract; and

    ●
    recognize
    revenue as the performance obligation is satisfied.

Consistent
with the criteria of ASC 606 “Revenue from Contracts with Customers,” we recognize revenue when performance obligations are
satisfied by transferring control of a promised good or service to a customer. For performance obligations that are satisfied at a point
in time, we also consider the following indicators to assess whether control of a promised good or service is transferred to the customer:
(i) right to payment; (ii) legal title; (iii) physical possession; (iv) significant risks and rewards of ownership; and (v) acceptance
of the good or service. For performance obligations satisfied over time, we recognize revenue over time by measuring the progress toward
complete satisfaction of a performance obligation.

Deferred
Revenue

Deferred
revenue results from transactions where the Company has received the payments from the customers but revenue recognition criteria under
the five-step model of ASC Topic 606 have yet to be met. Once all revenue recognition criteria have been satisfied, the revenues will
be recognized upon the transfer of risk and rewards to the customers in the consolidated statement of operations. We anticipate the majority
of the revenue will be recognized in fiscal year 2025. Management agreed that the amount received is non-refundable. However, this term
is not bound by any agreement. Thus, the customers may have the rights to challenge and demand the advances to be refunded under relevant
Commercial Laws or regulations.

Lease

Under
ASC Topic 842, the Company determines if an arrangement is a lease at inception. Lease assets and liabilities are recognized at the present
value of