Company: KMRK
Filing Date: 2025-08-15
Form Type: 20-F
Source: 0001213900-25-077494
Chunk: 147

Company: K-TECH SOLUTIONS CO LTD
Filing Date: 2025-08-15
Form: 20-F
Item: Item 19
Chunk 147
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) are not recognized on the balance sheet. Lease payments for such leases are recognized on a straight-line basis
over the lease term

Contract Liabilities

Contract liabilities consist
of payment received from customers in excess of revenue recognized. Contract liabilities will be recognized as revenue when promised services
are provided.

F-10

K-TECH SOLUTIONS COMPANY LIMITED AND SUBSIDIARY

NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES(cont.)

Related parties

The Company adopted ASC 850,
Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Parties are considered
to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over
the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control
or significant influence, such as a family member or relative, shareholder, or a related corporation.

Revenue Recognition

The Company applies the practical
expedient in Topic 606 that permits the Company to not disclose the aggregate amount of transaction price allocated to performance
obligations that are unsatisfied as of the end of the period as the Company’s contracts have an expected length of one year or less.
The Company also applies the practical expedient in Topic 606 that permits the recognition of incremental costs of obtaining contracts
as an expense when incurred if the amortization period of such costs is one year or less. These costs are included in cost of revenue.
The Company uses independent contractors and third-party carriers in the performance of its transportation services.

To achieve that core principle,
the Company applies the five steps defined under Topic 606: (i) identify the contract(s) with a customer, (ii) identify
the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the
performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company deals in the wholesale
business of finished products along with tooling services:

  Sales of finished goods (recognized at a point in time):  

The Company sells toy products, to customers
through fixed-price purchase orders. The sales are governed by Incoterms, which specify the transfer of control and ownership. Revenue
is recognized at a point in time when control of the goods is transferred to the customer, which occurs based on the applicable Incoterms.
Depending on different Incoterms, at