Company: ALCE
Filing Date: 2025-06-06
Form Type: 10-K
Source: 0001213900-25-052242
Chunk: 425

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-06-06
Form: 10-K
Item: Item 1A
Chunk 425
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 have the legal requirement to remove long-lived assets constructed on leased
property and to restore the leased property to its condition prior to the construction of the long-lived assets. This legal requirement
is referred to as an asset retirement obligation (ARO). If the Company determines that an ARO is required for a specific solar energy
facility, the Company records the present value of the estimated future liability when the solar energy facility is placed in service
as an ARO liability. The discount rate used to estimate the present value of the expected future cash flows for the year ended December
31, 2023 was 7.3%. The Company accretes the ARO liability to its future value over the solar energy facility’s useful life and records
the related interest expense to amortization expense on the consolidated statement of operations. Solar facilities that require AROs are
recorded as part of the carrying value of property and depreciated over the solar energy facility’s useful life.

Leases

The Company accounts for leases
in accordance with ASC 842, Leases. The standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU
asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating,
with classification affecting the pattern and classification of expense recognition in the Consolidated Statement of Operations and Other
Comprehensive Income/(Loss).

F-14

Lease assets and liabilities
are recognized based on the present value of the future lease payments over the lease term at the lease commencement date, discounted
using the Company’s incremental borrowing rate, and are presented as right of use (“ROU”) assets (for operating leases)
or as a component of property and equipment, net (for finance leases) and current and long-term lease liabilities on the Consolidated
Balance Sheet. The Company estimates its incremental borrowing rate based on information available at the commencement date in determining
the present value of future payments. Refer to Footnote 15 for additional information.

Operating lease expense attributable
to site leases is reported within cost of revenues in the Company’s Consolidated Statements of Operations and Comprehensive Income/(Loss).
Lease expense attributable to all other operating leases is reported within selling, general, and administrative expense in the Company’s
Consolidated Statements of Operations and Comprehensive Income/(Loss).

Revenue Recognition

The Company follows the guidance
of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606