Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 226

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 19
Chunk 226
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 exhausted.

Prepayments, deposits and other assets, net

Prepayment, deposit and other
assets, net, primarily consists of advances to suppliers for purchasing goods or services that have not been received or provided; security
deposits made to our customers; advances to employees prepayment for potential acquisition and antique art pieces obtained in lieu of
debt repayment. Prepayment, deposit and other assets are classified as either current or non-current based on the terms of the respective
agreements and periods when they are expected to be realized. These advances are unsecured and these advances and antique art pieces are
reviewed periodically to determine whether their carrying value has become impaired.

F-11

X3 HOLDINGS CO., LTD.

Note 2 - Summary of significant accounting
policies(continued)

Property and equipment, net

Property and equipment, net,
mainly comprise furniture and furniture, vehicles, compute, equipment and buildings are stated at cost less accumulated depreciation and
impairment. Property and equipment are depreciated over the estimated useful lives of the assets on a straight-line basis, after considering
the estimated residual value.

The estimated useful lives
are as follows:

                                                Useful Life   
  Office equipment, fixtures and furniture      3 - 10 years  
  Automobiles                                   5 - 8 years   
  Computer equipment                            5 years       
  Buildings                                     28 years      

Expenditures for maintenance
and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major
renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and the related accumulated depreciation
of assets retired or sold are removed from the respective accounts, and any gain or loss is charged to the statement of income and comprehensive
income.

Intangible assets, net

The Group’s intangible
assets mainly include capitalized development costs, purchased software and acquired software from business acquisitions. The Group follows
the provisions of Accounting Standards Codification (“ ASC”) 985-20, “ Costs of Software to be Sold, Leased, or Marketed.”
ASC 985-20 provides guidance on capitalization of the costs of software developed or obtained for sold, leased, or marketed. The Group
expenses all costs incurred during the preliminary project stage of its development, and capitalizes costs incurred during the application
development stage. Costs incurred relating to upgrades and enhancements to the application are capitalized if it is determined that these
upgrades or enhancements add additional functionality