Company: ALCE
Filing Date: 2025-06-06
Form Type: 10-K
Source: 0001213900-25-052242
Chunk: 1813

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-06-06
Form: 10-K
Item: Item 5
Chunk 1813
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 features requiring separate accounting.

Fair Value Option – Hybrid Debt Instruments

The Company has elected the
fair value option under ASC 825-10, Financial Instruments – Fair Value Option, for certain hybrid debt instruments (identify specific
instruments and cross reference related Note) that contain embedded features which would otherwise require bifurcation and separate accounting
under ASC 815, Derivatives and Hedging. The election simplifies accounting by measuring the entire instrument at fair value, with changes
in fair value recognized in earnings. Fair value is determined using observable market data when available and valuation models when observable
inputs are not readily available. Changes in fair value attributable to both credit risk and market risk are recorded in Other income
(expense), net in the Consolidated Statement of Operations and Other Comprehensive Income/(Loss).

The initial fair value of
the instrument includes any embedded features. Transaction costs incurred in connection with the issuance of the instrument are expensed
as incurred in accordance with ASC 825-10-25-3. Instruments for which the fair value option has been elected are classified as short-term
or long-term liabilities based on their contractual maturity dates. The Company evaluates the appropriateness of the fair value measurement
hierarchy at each reporting period and discloses the level within the fair value hierarchy (Level 1, Level 2, or Level 3) accordingly.

Recent Accounting Pronouncements 

In December 2023, the Financial
Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):
Improvements to Income Tax Disclosures to enhance the transparency of income tax disclosures relating to the rate reconciliation, disclosure
of income taxes paid, and certain other disclosures. The ASU should be applied prospectively and is effective for annual periods beginning
after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact on the related disclosures; however,
it does not expect this update to have an impact on its financial condition or results of operations.

F-21

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic
280): Improvements to Reportable Segment Disclosures to improve the disclosures about reportable segments and include more detailed information
about a reportable segment’s expenses. This ASU also requires that a public entity with a single reportable segment, provide all
of the disclosures required as part of the amendments and all existing disclosures required by Topic