Company: RETO
Filing Date: 2025-05-09
Form Type: 20-F
Source: 0001213900-25-041195
Chunk: 49

Company: ReTo Eco-Solutions, Inc.
Filing Date: 2025-05-09
Form: 20-F
Item: Item 19
Chunk 49
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 date of the consolidated financial statements.

Significant estimates required to be made by management
include, but are not limited to, the valuation of accounts receivable, advances to suppliers, intangible assets, the recoverability of
long-lived assets, provision necessary for contingent liabilities, revenue recognition under the input method, and realization of deferred
tax assets. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents represent cash on hand
and cash deposited in major third-party payment processing platforms such as Alipay. In addition, highly liquid investments which have
original maturities of three months or less when purchased are classified as cash equivalents.

Accounts Receivable, Net

In June 2016, the Financial Accounting Standards
Board (“ FASB”) issued Accounting Standards Update (“ ASU”) No. 2016-13, “ Financial Instruments - Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires the Company to measure and recognize
expected credit losses for financial assets held and not accounted for at fair value through net income. The Company adopted this guidance
effective January 1, 2023. Accounting Standards Codification (“ ASC”) 326 introduces an approach based on expected losses to
estimate the allowance for credit losses, which replaces the previous incurred loss impairment model. The adoption of this guidance did
not have a material impact on the Company’s consolidated financial statements. Accounts receivable was recognized and carried at
original invoiced amount less an estimated allowance for credit losses. The Company estimates the allowance for credit losses based on
an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated economic conditions,
customer-specific circumstances, recent payment history and other relevant factors. Allowance for credit losses amounted to $108,936and
$279as of December 31, 2024 and 2023, respectively.

Advances to Suppliers, Net

Advances to suppliers consist of balances paid to suppliers for services
and materials that have not been provided or received. Advances to suppliers for services and materials are short-term in nature. Advances
to suppliers are reviewed periodically to determine whether their carrying value has become impaired. The Company considers the assets
to be impaired if the collectability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for
uncollectible balances. In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts
by evaluating all available information