Company: TPET
Filing Date: 2025-09-12
Form Type: 10-Q
Source: 0001493152-25-013189
Chunk: 139

Company: Trio Petroleum Corp.
Filing Date: 2025-09-12
Form: 10-Q
Item: Part I, Item 8
Chunk 139
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and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely
than not” that a deferred tax asset will not be realized. At July 31, 2025 and October 31, 2024, the Company’s net deferred
tax asset has been fully reserved.

For
uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax
positions in the condensed consolidated financial statements. The Company’s practice is to recognize interest and penalties, if
any, related to uncertain tax positions in income tax expense in the statements of operations when a determination is made that such
expense is likely. The Company is subject to income tax examinations by major taxing authorities since inception.

The
Company’s wholly owned Canadian subsidiary is subject to taxation under Canadian federal and provincial tax laws. The subsidiary’s
income tax provision is calculated based on applicable Canadian tax rates, and any differences between U.S. and Canadian tax treatments
are considered in the condensed consolidated financial statements. The Company also considers the impact of the U.S.-Canada Tax Treaty
in determining its tax obligations, including withholding taxes on intercompany transactions.

Fair
Value Measurements

The
carrying values of financial instruments comprising cash and cash equivalents, payables, and notes payable-related party approximate
fair values due to the short-term maturities of these instruments. The notes payable- related party is considered a level 3 measurement.
As defined in ASC 820, Fair Value Measurements and Disclosures, fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company
utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about
risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or
generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and
the lowest priority to unobservable inputs (Level 3 measurement). This fair value measurement framework applies to both initial and subsequent
measurement.

    10

    Level
    1:
    Quoted
    prices are available in active markets for identical assets or liabilities as of the reporting date