Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 231

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 19
Chunk 231
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,580,543and $21,105,559for the year ended December 31, 2023.

For the years ended December
31, 2022, there was no impairment was recognized for the goodwill.

F-14

X3 HOLDINGS CO., LTD.

Note 2 - Summary of significant accounting
policies(continued)

Revenue recognition

The Group adopted ASC Topic
606. Revenues for the years ended December 31, 2024, 2023 and 2022 were presented under ASC 606. There is no adjustment to the opening
balance of retained earnings at January 1, 2019 since there was no change to the timing and pattern of revenue recognition upon adoption
of ASC 606. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Group’s customers
in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services and is recorded net
of value-added tax (“ VAT”). To achieve that core principle, the Group applies the following steps:

Step 1: Identify the contract
(s) with a customer

Step 2: Identify the performance
obligations in the contract

Step 3: Determine the transaction
price

Step 4: Allocate the transaction
price to the performance obligations in the contract

Step 5: Recognize revenue
when (or as) the entity satisfies a performance obligation

The Group derives its revenues
from four sources: (1) revenue from application development services, (2) revenue from consulting and technical support services, (3)
revenue from subscription services, (4) trading revenue and (5) others revenue. All of the Group’s contracts with customer do not
contain cancelable and refund-type provisions.

(1) Revenue from application
development service

The Group’s application
development service contracts are primarily on a fixed-price basis, which require the Group to perform services including project planning,
project design, application development and system integration based on customers’ specific needs. These services also require significant
production and customization. Upon delivery of the services, customer acceptance is generally required. In the same contract, the Group
is generally required to provide post-contract customer support (“ PCS’) for a period from three months to three years (“ PCS
period”) after the customized application development services are delivered. The type of services for PCS clause is generally not
specified in the contracts or as stand-ready services on when-and-if-available basis. The