Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 201

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 19
Chunk 201
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. Management reviews its advances to suppliers on a regular basis to determine if the allowance
is adequate, and adjusts the allowance when necessary. Delinquent account balances are written off against allowance for doubtful accounts
after management has determined that the likelihood of collection is not probable. Management continues to evaluate the reasonableness
of the valuation allowance policy and update it if necessary. As of September 30, 2023 and 2024, no allowance for the doubtful accounts
were deemed necessary.

Other current assets

Other
current assets primarily include prepaid tax expense, advances to employees and other deposits. Management regularly reviews the aging
of receivables and changes in payment trends and records allowances when management believes collection of amounts due are at risk. Accounts
considered uncollectable are written off against allowances after exhaustive collection efforts are made. As of September 30, 2023
and 2024, allowances for credit losses were niland RMB1,768, respectively.

Goodwill

Goodwill represents the excess purchase price over the estimated fair
value of net assets acquired in a business combination.

Goodwill is not amortized but is tested for impairment annually or
more frequently if events or changes in circumstances indicate that it might be impaired. Goodwill is tested for impairment at the reporting
unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce
the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in business
climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting
unit. The Group performs its annual impairment review of goodwill at September 30 of each year.

The Group has determined that it has one reporting unit, which is also
its only reportable segment.

The Group has the option to perform a qualitative assessment to determine
whether it is more-likely-than not that the fair value of a reporting unit is less than its carrying value prior to performing the two-step
goodwill impairment test. If it is more-likely-than-not that the fair value of a reporting unit is greater than its carrying amount, the
two-step goodwill impairment test is not required. If the two-step goodwill impairment test is required, first, the fair value of the
reporting unit is compared with its carrying amount (including goodwill). If the fair value of the reporting unit is less than its carrying
amount, an indication of goodwill impairment exists for the reporting unit