Company: DSWL
Filing Date: 2025-07-29
Form Type: 20-F
Source: 0001174947-25-001096
Chunk: 141

Company: DESWELL INDUSTRIES INC
Filing Date: 2025-07-29
Form: 20-F
Item: Item 18
Chunk 141
---
 included in selling expenses. During the years ended March 31, 2023, 2024 and 2025, shipping and handling costs expensed to selling expenses were $450, $537and $554, respectively.

Income taxes - Income taxes are provided on an asset and liability approach for financial accounting and reporting of income taxes. Any PRC tax paid by subsidiaries during the year is recorded. Deferred income taxes are recognized for all significant temporary differences at enacted rates and classified as non-current. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all, the deferred tax asset will not be realized. The Company classifies interest and/or penalties related to unrecognized tax benefits, if any, as a component of income tax provisions.

The Company adopted the provisions of ASC No. 740 “ Income Taxes” (“ ASC 740”), which clarifies the accounting for uncertainty in income taxes recognized by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides accounting guidance on de-recognition, classification, interest and penalties, disclosure and transition.

Foreign currency translation - The consolidated financial statements of the Company are presented in U. S. dollars as the Company is incorporated in the British Virgin Islands where the currency is the U. S. dollar. The Company’s subsidiaries conduct substantially all of their business in U. S. dollars, Hong Kong dollars or Chinese Renminbi. Notwithstanding this, U. S. dollar is considered by management to be the most appropriate functional currency of the Company’s subsidiaries because most of our customers contracted with our subsidiaries in U. S. dollars.

All transactions in currencies other than the functional currency during the year are translated at the exchange rates prevailing on the transaction dates. Monetary items existing at the balance sheet date denominated in currencies other than the functional currencies are translated at period end rates. Gains and losses resulting from the translation of foreign currency transactions and balances are included in the consolidated statement of comprehensive income.

The exchange rates between the Hong Kong dollars and the U. S. dollar were approximately7.7904,7.7904and7.7904as of March 31, 2023, 2024 and 2025, respectively. The exchange rates between the Chinese Renminbi and the U. S. dollar were approximately6.8806,7.1447and7.2429as of March