Company: ALCE
Filing Date: 2025-06-06
Form Type: 10-K
Source: 0001213900-25-052242
Chunk: 1802

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-06-06
Form: 10-K
Item: Item 5
Chunk 1802
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with classification affecting the pattern and classification of expense recognition in the Consolidated Statement of Operations and Other
Comprehensive Income/(Loss).

F-14

Lease assets and liabilities
are recognized based on the present value of the future lease payments over the lease term at the lease commencement date, discounted
using the Company’s incremental borrowing rate, and are presented as right of use (“ROU”) assets (for operating leases)
or as a component of property and equipment, net (for finance leases) and current and long-term lease liabilities on the Consolidated
Balance Sheet. The Company estimates its incremental borrowing rate based on information available at the commencement date in determining
the present value of future payments. Refer to Footnote 15 for additional information.

Operating lease expense attributable
to site leases is reported within cost of revenues in the Company’s Consolidated Statements of Operations and Comprehensive Income/(Loss).
Lease expense attributable to all other operating leases is reported within selling, general, and administrative expense in the Company’s
Consolidated Statements of Operations and Comprehensive Income/(Loss).

Revenue Recognition

The Company follows the guidance
of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue
from Contracts with Customers (“ASC 606”). The core principle underlying revenue recognition under ASC 606 is that revenue
should be recognized as goods or services are transferred to customers in an amount that reflects the consideration to which the Company
expects to be entitled. ASC 606 defines a five-step process to achieve this core principle. ASC 606 also mandates additional
disclosure about the nature, amount, timing, and uncertainty of revenues and cash flows arising from customer contracts, including significant
judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.

The Company has historically
derived revenues through its recently discontinued subsidiaries (see Footnote 6) from the sale of electricity and the sale of solar renewable
energy credits (RECs) in Romania and guarantees of origin certificates (GoOs) in Poland. The Company received Green Certificates based
on the amount of energy produced in Romania. Energy generation revenue and solar renewable energy credits revenue are recognized as electricity
generated by the Company’s solar energy facilities is delivered to the grid, at which time all performance obligations have been
delivered. Revenues are based on actual output and contractual sale prices set forth by its customer contracts.

The Company’s current
portfolio of renewable energy facilities is generally contracted under long-term Energy Offtake Ag