Company: ALCE
Filing Date: 2025-06-06
Form Type: 10-K
Source: 0001213900-25-052242
Chunk: 113

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-06-06
Form: 10-K
Item: Item 1
Chunk 113
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) other working capital
items based in each case on their fair values in accordance with ASC 805.

The Company performs the analysis of the acquisition
using income approach valuation methodology. Factors considered by management in its analysis include considering current market conditions
and costs to construct similar facilities. The Company also considers information obtained about each facility as a result of the Company’s
pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets and liabilities acquired or assumed.
In estimating the fair value, the Company also establishes estimates of energy production, current in-place and market power purchase
rates, tax credit arrangements, and operating and maintenance costs. A change in any of the assumptions above, which are subjective, could
have a significant impact on the results of operations.

When an acquired group of assets does not constitute
a business, the transaction is accounted for as an asset acquisition. The cost of assets acquired and liabilities assumed in asset acquisitions
is allocated based upon relative fair value. The fair value measurements of the solar facilities acquired and asset retirement obligations
assumed were derived utilizing an income approach and based, in part, on significant inputs not observable in the market. These inputs
include, but are not limited to, estimates of future power generation, commodity prices, operating costs, and appropriate discount rates.
These inputs require significant judgments and estimates at the time of the valuation. Transaction costs incurred, including legal and
financing fees directly related to the acquisition, are capitalized as a component of the assets acquired.

66

The allocation of the purchase price directly
affects the following items in the Company consolidated financial statements:

    ●
    The amount of purchase price allocated to the various tangible and intangible assets, liabilities, and non-controlling interests on the Company balance sheet;

    ●
    The amounts allocated to current assets or current liabilities are allocated at the acquisition value. The amounts allocated to long term tangible and intangible assets are amortized to depreciation or amortization expense, and

    ●
    The period over which tangible and intangible assets and liabilities are depreciated or amortized varies. Changes in the amounts allocated to these assets and liabilities will have a direct impact on Company results of operations.

Measurement of Level 3 Liabilities

Financial liabilities where values are based on
valuation techniques that require inputs that are both unobservable and are significant to the overall fair value measurement are classified
as Level 3 under the fair value hierarchy established in applicable accounting standards. The fair value of these Level 3 financial liabilities
is determined