Company: KPEA
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010699
Chunk: 25

Company: Kun Peng International Ltd.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 25
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 of sales of goods and represents the amount of consideration the Company is entitled to upon the transfer of goods. Pursuant
to FASB ASU No. 2016-08, Revenue from Contracts with Customers (TOPIC 606): Principal versus Agent Considerations (Reporting Revenue Gross
versus Net), the Company recorded revenue on a gross basis, net of surcharges and value added tax (“VAT”) of gross sales.
The Company recorded revenue on a gross basis because the Company is the primary obligor of the sales arrangements has latitude in establishing
prices, has discretion in suppliers’ selection and assumes credit risks on receivables on gross sales from customers.

The
Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU
2014-09”) using the full retrospective transition method. The Company’s adoption of ASU 2014-09 did not have a material impact
on the amount and timing of revenue recognized in its condensed consolidated financial statements.

The
Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations
under each of its agreements:

●
identify the contract with a customer;

●
identify the performance obligations in the contract;

●
determine the transaction price;

●
allocate the transaction price to performance obligations in the contract; and

●
recognize revenue as the performance obligation is satisfied.

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Consistent
with the criteria of ASC 606 “Revenue from Contracts with Customers,” we recognize revenue when performance obligations are
satisfied by transferring control of a promised good or service to a customer. For performance obligations that are satisfied at a point
in time, we also consider the following indicators to assess whether control of a promised good or service is transferred to the customer:
(i) right to payment, (ii) legal title, (iii) physical possession, (iv) significant risks and rewards of ownership, and (v) acceptance
of the good or service. For performance obligations satisfied over time, we recognize revenue over time by measuring the progress toward
complete satisfaction of a performance obligation.

Deferred Revenue

Deferred revenue results from
transactions where the Company has received the payments from the customers but revenue recognition criteria under the five-step model
of ASC Topic 606 have yet to be met. Once all revenue recognition criteria have been satisfied, the revenues will be recognized upon the
transfer of risk and rewards to the customers in