Company: LICN
Filing Date: 2025-04-29
Form Type: 20-F
Source: 0001213900-25-036244
Chunk: 33

Company: Lichen International Ltd
Filing Date: 2025-04-29
Form: 20-F
Item: Item 4A
Chunk 33
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 policies and (iii) the sensitivity
of reported results to changes in conditions and assumptions.

Revenue recognition

The Company adopted ASC Topic
606, Revenue from Contracts with Customers, effective as of January 1, 2019. Accordingly, the consolidated financial statements for the
years ended December 31, 2024, 2023 and 2022 are presented under ASC 606. The core principle of the guidance is that an entity should
recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. Revenue is the transaction price the Company expects to be
entitled to in exchange for the promised goods or services in a contract in the ordinary course of the Company’s activities and
is recorded net of value-added tax (“ VAT”). To achieve that core principle, the Company applies the following steps:

Step 1: Identify the contract (s) with
a customer

Step 2: Identify the performance obligations
in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price
to the performance obligations in the contract

Step 5: Recognize
revenue when (or as) the entity satisfies a performance obligation

No practical expedients were
used when the Company adopted the ASC 606. Revenue recognition policies for each type of revenue stream are as follows:

Financial and taxation solution services

Revenues from financial and
taxation solution services for which control of services is transferred over time is recognized progressively based on the contract costs
incurred to date (primarily comprising staff costs and industry expert cost by reference to the time as recorded in the monthly working
record incurred to date) as compared to the total costs to be incurred under the transaction (by reference to the total budgeted time
of the respective project) to depict the Company’s performance in transferring control of services promised to a customer. The Company
recognizes revenues over time only if it can reasonably measure its progress toward complete satisfaction of the performance obligation.
The Company normally requires the customers to pay a deposit upon entering into the service contracts.

Education support services - sales of teaching
and learning materials

Revenues from the sales of
educational materials for which control of assets is transferred at a point in time is recognized when the goods are delivered to customers.
The Company does not provide any sales-related warranties. There is no right of return by customers under the Company’s standard
contract terms.