Company: EZOO
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001493152-25-022083
Chunk: 41

Company: Ezagoo Ltd
Filing Date: 2025-11-13
Form: 10-Q
Item: Item 8
Chunk 41
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 as
to whether a contract conveys the right to the Company to control the use of identified property, plant or equipment for period of time
in exchange for consideration. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes
these lease expenses on a straight-line basis over the lease term.

The
Company has assessed its contracts and concluded that its leases consist of only operating leases. Operating leases are included in right-of-use
(ROU) assets, current portion of lease liabilities, and non-current portion of lease liabilities in the Company’s consolidated
balance sheets.

ROU
assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s
obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based
on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the
Company determines an incremental borrowing rate based on the information available at commencement date in determining the present value
of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit
rating would be. The ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments
is recognized on a straight-line basis over the lease term.

●
Revenue recognition

The
Company assesses and follows the guidance of ASC 606, revenue from contracts with customers is recognized using the following five steps:

    1.
    Identify the contract(s)
    with a customer;

    a. 
    The parties to the contract
    have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform
    their respective obligations.

    b. 
    The entity can identify
    each party’s rights regarding the services to be transferred.

    c. 
    The entity can identify
    the payment terms for the services to be transferred.

    d. 
    The contract has commercial
    substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the
    contract).

    e. 
    It is probable that the
    entity will collect substantially all of the consideration to which it will be entitled in exchange for the services that will be
    transferred to the customer.

    2.
    Identify the performance
    obligations