Company: DDC
Filing Date: 2025-10-24
Form Type: F-1
Source: 0001213900-25-102214
Chunk: 287

Company: DDC Enterprise Ltd
Filing Date: 2025-10-24
Form: F-1
Chunk 287
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ATED FINANCIAL STATEMENTS 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) (ab) Share-based Compensation The Company determines whether an award should be classified and accounted for as a liability award or an equity award. Both liability -classifiedawards and equity -classifiedawards are initially measured at their grant -datefair value. At each financial reporting date and ultimately at settlement date, the fair value of a liability -classifiedaward is remeasured. An equity -classifiedaward is not remeasured after grant date. If share -basedawards are subject to both service conditions and the occurrence of an initial public offering (“IPO”) as performance condition, cumulative share -basedcompensation expenses for the awards that have satisfied the service condition will be recorded upon the completion of the IPO, using the graded -vestingmethod. The fair value of share options at the time of grant or modification, if applicable, is determined using the binomial -latticeoption pricing model. The Company elects to recognize the effect of forfeitures as compensation costs when they occur. To the extent the required vesting conditions are not met resulting in the forfeiture of the share -basedawards, previously recognized compensation expense relating to those awards is reversed. (ac) Employee Benefits The full -timeemployees of the Company’s PRC subsidiaries and VIEs participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. The Company is required to accrue these benefits based on certain percentages of the qualified employees’ salaries and make contributions to the share based on the accrued amounts. The PRC government is responsible for the medical benefits and the pension liability to be paid to these employees and the Company’s obligations are limited to the amounts contributed. The Company has no further payment obligation once the contributions have been paid. The total amounts for such employee benefits were RMB3.8 million, RMB2.2 million and RMB2.0 million for the years ended December 31, 2022, 2023 and 2024, respectively, and expensed in the period incurred. (ad) Income Taxes The Company accounts for income taxes using the asset and liability method. Current income taxes are provided on the basis of income before income taxes for financial reporting purposes and adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Under this method, deferred