Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 119

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 5
Chunk 119
---
Topic 326), Measurement of Credit Losses on Financial Instruments, and issued subsequent amendments to the initial guidance within
ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11 and ASU 2020-02, collectively referred to as “ ASC 326”. ASC 326 requires
a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.
The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present
the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses is based
on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts
that affect the collectability of the reported amount. ASC 326 eliminates the probable initial recognition threshold in current GAAP and,
instead, reflects an entity’s current estimate of all expected credit losses. The adoption of this standard resulted in a change
of the Company’s provision policy primarily for accounts receivable. The Company adopted this ASC 326 on January 1, 2023 with no
material impact on the consolidated financial statements.

In October 2021, the FASB
issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.
Under ASU 2021-08, an acquirer must recognize and measure contract assets and contract liabilities acquired in a business combination
in accordance with Topic 606 as if it had originated the contracts. Prior to this ASU, an acquirer generally recognized contract assets
acquired and contract liabilities assumed that arose from contracts with customers at fair value on the acquisition date. The Company
adopted this ASU on January 1, 2023 and the adoption did not have a material impact on the Company’s consolidated financial statements.

In June 2022, the FASB issued
ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.
The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of
the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity cannot, as a separate
unit of