Company: MKDWW
Filing Date: 2025-04-03
Form Type: 20-F
Source: 0001641172-25-002607
Chunk: 85

Company: MKDWELL Tech Inc.
Filing Date: 2025-04-03
Form: 20-F
Item: Item 5
Chunk 85
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ables are stated net of provision of credit losses. We have developed a current expected credit loss (“ CECL”) model
based on historical experience, the age of the accounts receivable balances, credit quality of its customers, current economic conditions,
reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers.
We consider historical collection rates, current financial status, macroeconomic factors, and other industry-specific factors when evaluating
for current expected credit losses. Because expected credit losses can vary a number of assumptions about matters that are substantially over time, estimating
expected credit uncertain.

The
allowance for credit loss for accounts receivable were US$0.18, nil and US$0.01 million for the years ended December 31, 2022, 2023 and
2024 respectively. The company reversed nil, US$0.17 million and nil for the years ended December 31, 2022, 2023 and 2024 respectively.
For the year ended December 31, 2024, a 10% increase in our estimate of the allowance for credit loss related to accounts receivable
would increase our pre-tax loss by approximately 0.03%.

  52  

Net
realizable value of inventory

Inventories,
net primarily consisting of raw materials, work-in-process, semi-finished products and finished goods, are stated at the lower of cost
or net realizable value, with net realized value represented by estimated selling prices in the ordinary course of business, less reasonably
predictable costs of disposal and transportation. Cost of inventory is determined using the weighted average cost method.

Adjustments
are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving merchandise and damaged products,
which is dependent upon a combination of factors such as historical and forecasted consumer demand. Because the expected write-downs are inherently subject to variability due to numerous assumptions that evolve over
time, the estimation of net realizable value of inventory remains inherently uncertain.

The
write-down made for inventories were US$0.31 million, US$0.15 million and US$0.10 million for the years ended December 31,2022, 2023
and 2024, respectively. For the year ended December 31, 2024, a 10% increase in our estimate of the write-down for inventories would
increase our pre-tax loss by approximately 0.33%.

Impairment