Company: MKDWW
Filing Date: 2025-04-03
Form Type: 20-F
Source: 0001641172-25-002607
Chunk: 86

Company: MKDWELL Tech Inc.
Filing Date: 2025-04-03
Form: 20-F
Item: Item 5
Chunk 86
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of long-lived assets

We
review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may no longer be recoverable. When these events occur, we measure impairment by comparing the carrying value of the long-lived assets
to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the
sum of the expected undiscounted cash flow is less than the carrying amount of the assets, we would recognize an impairment loss, which
is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. No impairments of
long-lived assets were recognized as of December 31, 2022, 2023 and 2024. Because the estimated undiscounted future cash flows are inherently subject to variability due to numerous assumptions
that evolve over time, the impairment of long-lived assets remains inherently uncertain.

Valuation
allowance for deferred tax assets

We
account for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective
tax bases.

Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

As
of December 31, 2023 and 2024, deferred tax assets were US$3.19 million and US$3.39 million, respectively, and we have provided a valuation
allowance as we have concluded that it is more likely than not that these net operating losses would not be utilized in the future. As
of December 31, 2024, we had net operating loss carryforwards of approximately US$14.22 million, which arose from our subsidiaries, established
in the Mainland China.

The
provisions of ASC 740-10-25, “ Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for
consolidated financial statement recognition and measurement of a tax position taken (or expected to be