Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 235

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 19
Chunk 235
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’s losses. Accordingly, any undistributed net profit is allocated on a pro rata basis to
the ordinary shares and preferred shares; whereas any undistributed net loss is allocated to ordinary shares only.

Diluted loss per share is calculated by dividing
net loss attributable to ordinary shareholders, as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted
average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of
shares issuable upon the conversion of the preferred shares using the as-converted method, and exercise of outstanding share option using
the treasury stock method. Ordinary equivalent shares are not included in the denominator of the diluted loss per share calculation when
inclusion of such shares would be anti-dilutive.

(ag) Expected Credit Losses

In 2016, the FASB issued ASU 2016-13, Financial
Instruments - Credit Losses (ASC 326), which amends previously issued guidance regarding the impairment of financial instruments
by creating an impairment model that is based on expected losses. The Company adopted ASC 326 on January 1, 2023 with no material impact
on the consolidated financial statements.

The Company’s accounts receivable, other
receivables, short-term and long-term deposits, receivables of supplier rebates, other receivables due from YJW and KeKe, and deposits
for a potential acquisition are within the scope of ASC 326.09. The Company has identified the relevant risk characteristics of its customers
and the related receivables and other receivables which include size, type of the services or the products the Company provides, or a
combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Company
considers the historical credit losses experience, current economic conditions, supportable forecasts of future economic conditions, and
any recoveries in assessing the lifetime expected credit losses. Other key factors that influence the expected credit losses analysis
include customer demographics, payment terms offered in the normal course of business to customers, and industry-specific factors that
could impact the Company’s receivables. Additionally, external data and macroeconomic factors are also considered. This is assessed
at each quarter based on the Company’s specific facts and circumstances.

The Company considers historical credit loss rates
for each category of deposits and other receivables and also considers forward looking macroeconomic data in making its loss accrual determinations.
The Company