Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 225

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 19
Chunk 225
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using the binomial-lattice option pricing model. The Company elects to recognize the effect of forfeitures as compensation costs when
they occur. To the extent the required vesting conditions are not met resulting in the forfeiture of the share-based awards, previously
recognized compensation expense relating to those awards is reversed.

F-39

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(cont.)

(ac) Employee Benefits

The full-time employees of the Company’s
PRC subsidiaries and VIEs participate in a government mandated defined contribution plan, pursuant to which certain pension benefits,
medical care, employee housing fund and other welfare benefits are provided to employees. The Company is required to accrue these benefits
based on certain percentages of the qualified employees’ salaries and make contributions to the share based on the accrued amounts.
The PRC government is responsible for the medical benefits and the pension liability to be paid to these employees and the Company’s
obligations are limited to the amounts contributed. The Company has no further payment obligation once the contributions have been paid.
The total amounts for such employee benefits were RMB3.8million, RMB2.2million and RMB2.0million for the years ended December 31, 2022,
2023 and 2024, respectively, and expensed in the period incurred.

(ad) Income Taxes

The Company accounts for income taxes using the
asset and liability method. Current income taxes are provided on the basis of income before income taxes for financial reporting purposes
and adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations
of the relevant tax jurisdictions. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
bases and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax laws and
rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the consolidated statements of operations
and comprehensive loss in the period that includes the enactment date. A valuation allowance is provided to reduce the amount of deferred
income tax assets if based on the weight of available evidence, it is more likely than not that some portion, or all, of the deferred
income tax assets will not be realized. This assessment considers, among