Company: SDAWW
Filing Date: 2025-05-21
Form Type: 6-K
Source: 0001213900-25-046449
Chunk: 4

Company: SunCar Technology Group Inc.
Filing Date: 2025-05-21
Form: 6-K
Chunk 4
---
 CONSOLIDATED FINANCIAL STATEMENTS (In U.S. Dollar thousands, except share and per share data)

| (c). | Accounts receivable, net |

Accounts receivable, net are stated at the original
amount less allowances for credit losses. Accounts receivable are recognized in the period when the Group has provided services to its
customers and when its right to consideration is unconditional. The Group adopted ASC Topic 326, Financial Instruments-Credit Losses (Topic
326) from January 1, 2023 using modified-retrospective transition approach with a cumulative-effect adjustment to shareholders’
equity amounting to $ recognized as of January 1, 2023. The Group assesses collectability by reviewing accounts receivable on a collective
basis where similar characteristics exist, primarily based on similar business lines, and on an individual basis when the Group identifies
specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Group
considers historical collectability based on past due status, the age of the accounts receivable balances, credit quality of the Group’s
customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions,
and other factors that may affect the Group’s ability to collect from customers.

| (d). | Warrant |

The Group accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing
Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The
assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability
pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether
the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net
cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This
assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly
period end date while the warrants are outstanding.

For issued or modified warrants that meet all
of the criteria for equity classification, the warrants are required to be recorded as