Company: ALCE
Filing Date: 2025-06-06
Form Type: 10-K
Source: 0001213900-25-052242
Chunk: 2245

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-06-06
Form: 10-K
Item: Item 7
Chunk 2245
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equipment, the cost and accumulated depreciation are removed from the respective accounts and a gain or loss, if any, is recognized on
the Consolidated Statements of Operations and Comprehensive Income/(Loss) during the year of disposal. When the Company abandons the anticipated
construction of a new solar energy facility during the development phase, costs previously capitalized on the Consolidated Balance Sheet
are written off to the Consolidated Statements of Operations and Comprehensive Income/(Loss) at the parent company.

F-13

Capitalized Development Costs

Capitalized development costs
relate to various projects that are under development for the period. As management determines to proceed with the development of a new
solar park or purchase an existing construction project of a solar park, costs toward the final value of that project are recorded in
Capitalized Development Costs on the Consolidated Balance Sheet. Costs can include, but are not limited to, financial, technical, and
legal due diligence costs.

As the Company closes either
the purchase or development of new solar parks and begins construction, the balance of these costs is reclassified to Construction in
Process on the Consolidated Balance sheet. Once construction is complete and all costs have been incurred, the final asset balance is
displayed in Property and Equipment. If the Company does not close on the prospective project, these costs are written off to Development
Costs on the Consolidated Statements of Operations and Comprehensive Income/(Loss).

Impairment of Solar Energy Facilities

The Company reviews its investments
in property and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may
not be recoverable. Impairment is evaluated at the asset group level, which is determined based upon the lowest level of separately identifiable
cash flows. When evaluating for impairment, if the estimated undiscounted cash flows from the use of the asset group are less than the
asset group’s carrying amount, then the asset group is deemed to be impaired and is written down to its fair value. Fair value is
determined by net realizable value of the assets using ASC 820. The amount of the impairment loss is equal to the excess of the asset
group’s carrying value over its estimated fair value.

During the year ended December
31, 2023, the Company recorded an impairment loss of $11.8 million in the Consolidated Statement of Operations and Comprehensive Income/(Loss)
related to the Polish assets held for sale to reduce the carrying amount of the assets in the disposal group to their fair value less