Company: FSTWF
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-044386
Chunk: 171

Company: FST Corp.
Filing Date: 2025-05-15
Form: 20-F
Item: Item 16
Chunk 171
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 lease incentives. Some of the Group’s
lease agreements contained renewal options; however, the Group did not recognize right-of-use assets or lease liabilities for renewal
periods unless it was determined that the Group was reasonably certain of renewing the lease at inception or when a triggering event occurred.
Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Group leases factories, warehouses, offices
space, vehicles and machineries under non-cancellable operating leases. The Group considers those renewal or termination options that
are reasonably certain to be exercised in the determination of the lease term and initial measurement of right of use assets and lease
liabilities.

The Group determines whether a contract is or
contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease.

As of December 31, 2024 and 2023, the Group had
no long-term leases that were classified as a financing lease, and the Group’s lease contracts only contain fixed lease payments
and do not contain any residual value guarantee.

The Group’s lease agreements do not contain
any material residual value guarantees or material restrictive covenants.

(m) Borrowings

Borrowings comprise long-term and short-term bank
borrowings. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at
amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized as interest expense
in profit or loss over the period of the borrowings using the effective interest method.

(n) Accounts and other payables

Accounts and other payables represent liabilities
for goods and services provided to the Group prior to the end of the financial year which are unpaid. They are classified as current liabilities
as payment is due within one year or less.

Accounts and other payables are initially recognized
as fair value, and subsequently carried at amortized cost using the effective interest method.

F-11

FST Corp.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In U. S. dollars, except for share and per
share data, or otherwise noted)

2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES(cont.)

(o) Impairment of
long-lived assets

The Group reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events
occur, the Group measures impairment