Company: KPEA
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002124
Chunk: 972

Company: Kun Peng International Ltd.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 1C
Chunk 972
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 satisfied over time, we recognize revenue over time by measuring the progress toward
complete satisfaction of a performance obligation.

Deferred
Revenue

Deferred
revenue results from transactions where the Company has received the payments from the customers but revenue recognition criteria under
the five-step model of ASC Topic 606 have yet to be met. Once all revenue recognition criteria have been satisfied, the revenues will
be recognized upon the transfer of risk and rewards to the customers in the consolidated statement of operations. We anticipate the majority
of the revenue will be recognized in fiscal year 2025. Management agreed that the amount received is non-refundable. However, this term
is not bound by any agreement. Thus, the customers may have the rights to challenge and demand the advances to be refunded under relevant
Commercial Laws or regulations.

Lease

Under
ASC Topic 842, the Company determines if an arrangement is a lease at inception. Lease assets and liabilities are recognized at the present
value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future
lease payments is the Company’s incremental borrowing rate based on the information available at the lease commencement date. The
Company generally uses the base, non-cancelable lease term in calculating the right-of-use assets and lease liabilities.

The
Company may recognize the lease payments in the condensed consolidated statements of operation on a straight-line basis over the lease
terms and variable lease payments in the periods in which the obligations for those payments are incurred, if any. The lease payments
under the lease arrangements are fixed.

The
Company elected the package of practical expedients which allow the Company to carryforward its historical lease classification, its
assessment on whether a contract is or contains a lease, and its initial direct costs for any lease that exists prior to adoption of
the new standard.

The
Company also elected to apply the short-term lease exception for lease arrangements with a lease term of 12 months or less at commencement.
Lease terms used to compute the present value of lease payments do not include any option to extend, renew, or terminate the lease that
the Company is not reasonably certain to exercise upon the lease inception. Accordingly, operating lease right-of-use assets and liabilities
do not include leases with a lease term of 12 months or less.

92

Research
and Development Expenses

Research
and development (R&D) expenses are all costs associated with the original development and design of the product as well as any intellectual
property (IP) generated during the