Company: FOXX
Filing Date: 2025-10-15
Form Type: 10-K
Source: 0001213900-25-098953
Chunk: 1280

Company: Foxx Development Holdings Inc.
Filing Date: 2025-10-15
Form: 10-K
Item: Item 7
Chunk 1280
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 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 years ended June 30, 2025 and 2024, the Company did not recognize impairment loss
against its right-of-use assets.

For
a lease with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset
not to recognize lease assets and lease liability. For the lease that with lease term of one year or shorter, the Company has elected
to not recognize right-of-use asset and lease liability.

Income
taxes

The
Company accounts for income taxes in accordance with FASB ASC Topic 740, “Income Taxes”. Under the asset and liability
method as required by this accounting standard, deferred income tax assets and liabilities are recognized for the expected