Company: AOSL
Filing Date: 2025-08-28
Form Type: 10-K
Source: 0001628280-25-041297
Chunk: 18

Company: ALPHA & OMEGA SEMICONDUCTOR Ltd
Filing Date: 2025-08-28
Form: 10-K
Item: Item 15
Chunk 18
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  Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities and long-term operating lease liabilities on the Company's consolidated balance sheets.  Finance leases are included in property, plant and equipment, finance lease liabilities and long-term finance leases liabilities on the consolidated balance sheets.Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.  The Company determines its incremental borrowing rate based on the information available at the lease commencement date.  The operating lease ROU assets also include any lease payments made and exclude lease incentives.  Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.  Operating lease expense is generally recognized on a straight-line basis over the lease term.  Variable lease payments are expensed as incurred and are not included within the operating lease ROU asset and lease liability calculation.  The Company does not record leases on the consolidated balance sheet with a term of one year or less.  The Company elected to combine its lease and non-lease components as a single lease component for all asset classes. Product WarrantyThe Company provides a standard one-year warranty for products from the date of purchase by the end customers.  The Company accrues for estimated warranty costs at the time revenue is recognized.  The Company's warranty obligation is determined by product failure rates, labor and material costs for replacing defective parts, related freight costs for failed parts and other costs to fulfill warranty obligation.  The Company monitors its warranty claims and maintains warranty reserves based on historical experiences and anticipated warranty claims known at the time of estimation.Shipping and Handling CostsShipping and handling costs are included in cost of goods sold.

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Research and Development Research and development costs are expensed as incurred.  Provision for Income Taxes Income tax expense or benefit is based on income or loss before taxes.  Deferred tax assets and liabilities are recognized principally for the expected tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts.The Company is subject to income taxes in a number of jurisdictions.  Significant judgment is required in determining the worldwide provision for income taxes.  There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business.  The Company establishes accruals for certain tax contingencies based on estimates of whether additional taxes may be due.  While the final tax outcome of these matters may differ from the amounts that were initially recorded,