Company: XXC
Filing Date: 2025-11-18
Form Type: 20-F
Source: 0001213900-25-111691
Chunk: 86

Company: XINXU COPPER INDUSTRY TECHNOLOGY Ltd
Filing Date: 2025-11-18
Form: 20-F
Item: Item 19
Chunk 86
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 customer. In the principal versus agent
consideration, (1) the Company is primarily responsible for fulfilling the performance obligations; (2) the Company has inventory
risk before the products are transferred to the customer; and (3) the Company has discretion in establishing price for the products,
and therefore, the Company is a principal.

For processing service income,
the Company considers the service agreement to be a contract with a customer. The Company’s obligations are to process copper bars
as per the customer’s requirements and transfer processed products to the customer. Prices are determined based on negotiations
with the customers and are not subject to adjustment. Revenue is recognized when control of the processed products is transferred to the
customer, which typically occurs at delivery acceptance. The Company is a principal since no third party is involved in satisfying the
Company’s performance obligations.

F-12

XINXU COPPER INDUSTRY TECHNOLOGY LIMITED

NOTE 2 - SIGNIFICANT ACCOUNTING
POLICIES(cont.)

Revenues are reported net of
all value added taxes. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient
under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company allocates the transaction
price to each distinct product based on their relative standalone selling price.

Cost of Revenue

Cost of revenue are costs that
are related to the products that the Company sells, and the service the Company provides, which is mainly composed of direct costs, such
as labour and raw materials, and manufacturing costs, such as supplementary materials, warehouse utilities, and repair and maintenance
costs.

Government Grant

Government grants are compensations
for the purpose of giving immediate financial support to the Company according to the government’s policy. The government evaluates
the Company’s eligibility for the grants on a consistent basis and then makes the payment. Therefore, there are no restrictions
on the grants.

Government grants are recognized
when received and all the conditions for their receipt have been met. The grants received were $825,799, $276,073and $8,887for the fiscal years
ended June 30, 2025, 2024 and 2023, respectively, which were included in other income.

R& D Costs

R& D activities are directed
toward the development of new products as well as improvements in existing processes. These costs, which primarily include salaries and
supplies, are expensed as