Company: FOXX
Filing Date: 2025-10-15
Form Type: 10-K
Source: 0001213900-25-098953
Chunk: 1016

Company: Foxx Development Holdings Inc.
Filing Date: 2025-10-15
Form: 10-K
Item: Item 5
Chunk 1016
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 right
to control the use of an identified asset for a period of time, or term, in exchange for consideration, and operating lease liabilities
represent its obligation to make lease payments arising from the aforementioned right.

Operating
lease right-of-use (“ROU”) assets and liabilities are initially recorded based on the present value of lease payments over
the lease term, which includes the minimum unconditional term of the lease, and may include options to extend or terminate the lease
when it is reasonably certain at the commencement date that such options will be exercised. As the rate implicit for each of the Company’s
leases is not readily determinable, the Company uses incremental borrowing rate as effective interest rate, based on the information
available at the lease commencement date in determining the present value of its expected lease payments. Operating lease assets also
include any initial direct costs and any lease payments made prior to the lease commencement date and are reduced by any lease incentives
received. According to ASC 842-10-15-37, a lessee may, as an accounting policy election by class of underlying asset, choose not
to separate non-lease components from lease components and instead to account for each separate lease component and the non-lease components
associated with that lease component as a single lease component. The Company has identified the common area maintenance (CAM) fee as
a non-lease component and elected to not separate it from the lease component.

Operating
lease assets are amortized on a straight-line basis in operating lease expense over the lease term on the consolidated statements of
operations. The related amortization of ROU assets along with the change in the operating lease liabilities are separately presented
within the cash flows from operating activities on the consolidated statements of cash flows. The Company records lease expenses for
operating leases on a straight-line basis over the lease term.

The
Company reviews the impairment of its right-of-use assets consistent with the approach applied for its other long-lived assets on an
annual basis. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate
that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover
the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected
to include the carrying amount of operating lease right-of-use assets in any tested asset group and include the associated lease payments
in the undiscounted future pre-tax cash flows. For the