Company: MEGL
Filing Date: 2025-04-14
Form Type: 20-F
Source: 0001641172-25-004566
Chunk: 129

Company: Magic Empire Global Ltd
Filing Date: 2025-04-14
Form: 20-F
Item: Item 19
Chunk 129
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10, Derivatives and Hedging, establishes
accounting and reporting standards for derivative instruments, including certain derivatives embedded in other contracts. ASC 815-10 generally
requires an entity to recognize all derivatives as either assets or liabilities, and to measure those investments at fair value. The Group
evaluates its investments to determine if investments have derivative or contain certain features that qualify as embedded derivatives.
When applicable, the Group follows ASC 815-10 and re-valued any derivative instruments for fair value at each reporting date.

Contract
liabilities

The
Group bills its clients based upon contractual schedules. The timing of revenue recognition, billings and cash collections result in
accounts receivable and contract liabilities.

Contract
liabilities represent the upfront payments received upon signing of the contract for initial public offering/independent financial advisory/financial
advisory services and advances from clients related to compliance advisory services. Advance payments in excess of related accounts receivable
are presented as contract liabilities on the consolidated balance sheets.

Lease

The
Group is a lessee of non-cancellable operating leases for corporate office premise. The Group determines if an arrangement is a lease
at inception. Lease assets and liabilities are recognized at the present value of the future lease payments at the leases commencement
date. The interest rate used to determine the present value of the future lease payments is the Group’s incremental borrowing rate
based on the information available at the lease commencement date. The Group generally uses the base, non-cancellable lease term in calculating
the right-of-use assets and liabilities.

The
Group may recognize the lease payments in the consolidated statements of operations on a straight-line basis over the lease terms and
variable lease payments in the periods in which the obligations for those payments are incurred, if any. The lease payments under the
lease arrangements are fixed.

The
lease standard provides practical expedients for an entity ongoing accounting. The Group elected to apply the short-term lease exception
for lease arrangements with a lease term of 12 months or less at commencement. Lease terms used to compute the present value of lease
payments do not include any option to extend, renew or terminate the lease that the Group is not able to reasonably certain to exercise
upon the lease inception. Accordingly, operating lease right-of-use assets and liabilities do not include leases with a lease term of
12 months or less.

The
Group did not adopt the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease
component.