Company: GAUZ
Filing Date: 2025-03-11
Form Type: 20-F
Source: 0001213900-25-022437
Chunk: 159

Company: Gauzy Ltd.
Filing Date: 2025-03-11
Form: 20-F
Item: Item 19
Chunk 159
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 prepaid or accrued lease payments, plus initial direct costs incurred in respect
of the lease. The Company uses its incremental borrowing rate based on the information available at the commencement date to determine
the present value of the lease payments.

The lease term for
all the Company’s leases includes the noncancellable period of the lease plus any additional periods covered by either a Company
option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise.

The subsequent measurement
depends on whether the lease is classified as finance lease or an operating lease.

Leases are classified
as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the
lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably
certain to be exercised, the lease term is for a major part of the remaining useful life of the asset, the present value of the lease
payments equals or exceeds substantially all of the fair value of the asset, or the underlying asset is of such a specialized nature that
it is expected to have no alternative use to the lessor at the end of lease term. A lease is classified as an operating lease if it does
not meet any one of these criteria.

For finance leases,
the ROU asset is subsequently amortized using the straight-line method from the lease commencement date to the earlier of the end of its
useful life or the end of the lease term unless the lease transfers ownership of the underlying asset to the Company or the Company is
reasonably certain to exercise an option to purchase the underlying asset. In those cases, the ROU asset is amortized over the useful
life of the underlying asset. Amortization of the ROU asset is recognized and presented separately from interest expense on the lease
liability.

F-14

GAUZY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(U. S. dollars in thousands, except share and per
share amounts)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES(continued):

For operating leases,
the ROU asset is subsequently measured at the present value of the remaining lease payments, adjusted for the remaining balance of any
lease incentives received, any cumulative prepaid or accrued rent and any unamortized initial direct costs. Operating lease expense is
recognized on a straight-line basis over the lease term.

Operating lease ROU
assets are presented as operating