Company: MEGL
Filing Date: 2025-04-14
Form Type: 20-F
Source: 0001641172-25-004566
Chunk: 133

Company: Magic Empire Global Ltd
Filing Date: 2025-04-14
Form: 20-F
Item: Item 19
Chunk 133
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 GLOBAL LIMITEDNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  SUMMARY                                     
  OF SIGNIFICANT ACCOUNTING POLICIES (cont.)  
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The
Group allocates the transaction price to each performance obligation based on the best estimate of relative standalone selling price
for each performance obligation identified in the contract. The Group utilizes key assumptions to determine the standalone selling price,
which may include other comparable transactions, pricing considered in negotiating the transaction, market conditions, project complexity,
customer demographics and the estimated costs. Generally, the standalone selling prices for each performance obligation of the Group’s
IPO sponsorship services are reasonably consistent across customers (that is, not highly variable), standalone selling price estimates
are derived from considering the Group’s pricing history and expected cost plus a margin approach.

The
entire service fee from clients are non-refundable and the Group is entitled to receive upfront payment upon signing the contract. As
the preparation stage of a listing application involves a series of tasks which are interrelated and are not separable or distinct as
the Group’s clients cannot benefit from any standalone task, the Group concludes the stage of submission of listing application
as the first performance obligation and recognizes the revenue from upfront payment and fee received upon submission of listing application
together at the time of submission of listing application. For projects which the Group receives upfront payment upon signing the contract
but no listing application is submitted by the expiry of the contract, the Group recognizes revenue from the upfront payment at the lapse
of contract.

For
service fee received upon attending the listing hearing of the Stock Exchange for the listing application, which is distinct and regarded
as the second performance obligation by the Group, revenue are recognized by the Group at the date the hearing is held and the Group
has an enforceable right to payment for such performance.

For
service fee received upon listing, which is the third performance obligation of IPO sponsorship services, revenue is recognized upon
completion of the IPO, which is evidenced by listing of the clients on the Stock Exchange.

In
some cases, the Group is entitled to the discretionary bonus only upon listing, amount of which is to be decided by the clients. The
Group accounts for the discretionary bonus as variable consideration. The amount of such variable consideration should not be
included in the transaction price, since it is not probable that a significant reversal of cumulative revenue recognized will occur
resulting from a change in estimate of the consideration the Group will receive upon client’s listing. The