Company: LRHC
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032211
Chunk: 115

Company: La Rosa Holdings Corp.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1
Chunk 115
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Goodwill is the excess of cost over the fair value
of net assets acquired. Goodwill is not amortized but tested for impairment annually or more frequently if certain circumstances indicate
a possible impairment may exist. The Company recognized goodwill for the first time in the fourth quarter of 2023. The Company performed
a qualitative assessment as of October 1, 2024 and determined it is more likely than not that the fair value of a reporting unit is less
than its carrying value. The qualitative assessment included, but is not limited to, market and macroeconomic conditions, cost factors,
cash flows, changes in key management personnel, and the Company’s share price. The result of this assessment determines whether
it is necessary to perform a quantitative goodwill impairment test. As a result of this assessment the Company has determined that there
is impairment in goodwill as of December 31, 2024 and it has recorded a $787,438 impairment charge against goodwill.

F-11

Revenue Recognition

The Company applies the provision of FASB ASC
606, Revenue from Contracts with Customers (“ASC 606”). The Company measures revenue within the scope of ASC 606 by
applying the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract;
(iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize
revenue when (or as) the Company satisfies a performance obligation. At contract inception, the Company assesses the goods or services
promised within each contract that falls under the scope of ASC 606, determines those that are performance obligations and assesses whether
each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated
to the respective performance obligation when the performance obligation is satisfied. The application of these five steps necessitates
the development of assumptions that require judgment.

The Company records revenue based upon the consideration
specified in the client arrangement, and revenue is recognized when the performance obligations in the client arrangement are satisfied.
A performance obligation is a contractual promise to transfer a distinct good or service to the customer. The transaction price of a contract
is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance
obligation. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects
the consideration the