Company: QSJC
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001683168-25-008383
Chunk: 9

Company: TANCHENG GROUP CO., LTD.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 9
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 at the rates used in translation.

     9 

(h) Foreign Currency Risk

The RMB is not a freely convertible currency. The
State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of the RMB
into other currencies. The value of the RMB is subject to changes in central government policies and to international economic and political
developments affecting supply and demand in the China Foreign Exchange Trading System market. All the Company’s cash and cash equivalents
are in RMB.

(i) Fair Value

Fair value is the price that would be received from
selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining
the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal
or most advantageous market in which it would transact, and it considers assumptions that market participants would use when valuing the
asset or liability. Authoritative literature provides a fair value hierarchy that prioritizes the inputs to valuation techniques used
to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls
is based upon the lowest level of input that is significant to the fair value measurement as follows:

Level 1

Level 1 applies to assets or liabilities for
which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for
which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, such as
quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with
insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are
observable or can be derived principally from, or corroborated by observable market data. 

Level 3

Level 3 applies to assets or liabilities for
which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets
or liabilities.

(j) Fair Value of Financial Instruments

The Company’s financial instruments consist
primarily of cash and cash equivalents, other receivables, accounts payable, and other payables and accruals. The carrying amounts of
these balances approximate their fair values due to the short-term maturities of these instruments.

(k) Income Taxes

Income tax expense comprises current and deferred
tax