Company: ALCE
Filing Date: 2025-06-06
Form Type: 10-K
Source: 0001213900-25-052242
Chunk: 112

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-06-06
Form: 10-K
Item: Item 1
Chunk 112
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 mainly driven by the $75.2 million payment made towards
the Solis Bond principal balance and $45.4 million of intercompany activity as part of the sale of Solis and its Romanian subsidiaries.

Critical Accounting Estimates 

The preparation of financial statements in conformity
with US GAAP requires the Company to make estimates and assumptions in certain circumstances that affect amounts reported in its consolidated
financial statements and related footnotes. In preparing these consolidated financial statements, the Company has made its best estimates
of certain amounts included in the consolidated financial statements. Application of accounting policies and estimates, however, involves
the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.
In arriving at the Company’s critical accounting estimates, factors the Company considers include how accurate the estimate or assumptions
have been in the past, how much the estimate or assumptions have changed, and how reasonably likely such change may have a material impact.
The Company’s critical accounting policies are discussed below.

Business Combinations

The Company acquires assets which operate in nature
with existing revenue streams and assets which are constructed for the purpose of being sold. The Company applies the screen test per
ASC 805 to determine an asset acquisition versus business combination and accounts for business combinations by recognizing in the financial
statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interests in the acquiree at fair value
at the acquisition date. The Company also recognizes and measures the goodwill acquired or a gain from a bargain purchase in the business
combination and determines what information to disclose to enable users of an entity’s financial statements to evaluate the nature
and financial effects of the business combination. In addition, acquisition costs related to business combinations are expensed as incurred.
Cost directly attributed to an asset acquisition are capitalized to the asset per ASC 805 Business combinations is a critical accounting
policy as there are significant judgments involved in the allocation of acquisition costs and determining the fair value of the net assets
acquired. Refer to Footnote 5 to the accompanying financial statements for more information.

When the Company acquires renewable energy facilities,
the Company allocates the purchase price to; (i) the acquired tangible assets and liabilities assumed, primarily consisting of plant equipment
and long-term debt, (ii) the identified intangible assets and liabilities, primarily consisting of the value of favorable and unfavorable
rate PPAs and REC agreements and the in-place value of market rate PPAs, (iii) non-controlling interests, and (iv