Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 203

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 19
Chunk 203
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, the cost and accumulated depreciation are removed
from the accounts, and any resulting gains or losses are included in income/loss in the year of disposition. As of September 30, 2024,
the Company had automobiles with useful lives ranging betweenthreeandfive
years.

Operating leases

The Company applied the practical expedients in
the transition to the new standard allowed under ASC 842:

  Reassessment of expired or existing contracts: The Company elected not to reassess, at the application date, whether any expired or existing contracts contained leases, the lease classification...  

  Use of hindsight: The Company elected to use hindsight in determining the lease term (that is, when considering options to extend or terminate the lease and to purchase the underlying asset) an...  

  Reassessment of existing or expired land easements: The Company elected not to evaluate existing or expired land easements that were not previously accounted for as leases under ASC 840, as all...  

  Separation of lease and non-lease components: Lease agreements that contain both lease and non-lease components are generally accounted for separately.  

  Short-term lease recognition exemption: The Company also elected the short-term lease recognition exemption and will not recognize ROU assets or lease liabilities for leases with a term less th...  
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The Company determines if an arrangement is a
lease at inception under FASB ASC Topic 842, Right of Use Assets (“ ROU”) and lease liabilities are recognized at commencement
date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments
that are fixed and determinable at the time of commencement. As most of its leases do not provide an implicit rate, it uses its 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 assets include
adjustments for prepayments and accrued lease payments. The ROU asset also includes any lease payments made prior to commencement and
is recorded net of any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease
when it is reasonably certain that it will exercise such options.

ROU assets are reviewed for impairment when indicators
of impairment are present. ROU assets