Company: WKSP
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000850
Chunk: 245

Company: Worksport Ltd
Filing Date: 2025-03-27
Form: 10-K
Item: Item 4
Chunk 245
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: (a) the goods
or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the
earlier of the performance commitment date or performance completion date.

Income
taxes - Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary
differences between taxable income and pretax financial income, and between the tax bases of assets and liabilities and their reported
amounts in the financial statements. Deferred tax assets and liabilities are included in the consolidated financial statements at currently
enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled.
As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

Tax
positions initially need to be recognized in the financial statements when it is more likely than not the positions will be sustained
upon examination by the tax authorities.

The Company recognizes interest accrued related to
unrecognized tax benefits in interest expenses and penalties in operating expenses.

The Company treats tax on the Global Intangible Low-Tax
Income (“GILTI”) as a current period cost included in tax expense in the year incurred. The Company does not measure the impact
of GILTI in the determination of deferred taxes.

Cash
and cash equivalents - All highly liquid investments with an original maturity of three months or less are considered cash equivalents.
Cash and cash equivalents in financial institutions may exceed insured limits at various times during the year and subject the Company
to concentrations of credit risk. Cash and cash equivalents includes restricted cash at December 31, 2023 of $730,802 and primarily represents
funds held to satisfy obligations related to a financing arrangement. There is no restricted cash at December 31, 2024 (see Note 13).

    49

Worksport
                                            Ltd.

Notes
to the Consolidated Financial Statements

December
31, 2024 and 2023

1.
Description of Business and Significant Accounting Policies (continued)

Accounts
receivable, net – Accounts receivable primarily
consists of amounts that are due and payable from distributors, wholesalers, and private label partners. Receivables are stated at net
realizable value, which approximates fair value. Receivables are reduced by an allowance for credit losses for amounts that may be uncollectible
in the future.    The allowance is determined by considering factors such as historical experience,