Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 213

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 19
Chunk 213
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 the customer.

Accounts receivable, net are recognized in the
period when the Company has transferred products or provided services to its customers and when its right to consideration is unconditional.
Amounts collected on accounts receivable, net are included in net cash provided by operating activities in the consolidated statement
of cash flows. In evaluating the collectability of receivable balances, the Company considers specific evidence including aging of the
receivable, the customer’s payment history, its current credit worthiness and current economic trends. The Company makes a specific
allowance if there is strong evidence indicating that an account receivable is likely to be unrecoverable, accounts receivable, net are
written off after all collection efforts have been ceased. The Company does not have any off-balance sheet credit exposure related to
its customers.

F-30

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(cont.)

(l) Inventories

Inventories, consisting of products available
for sale, are stated at the lower of cost and net realizable value. The Company’s inventories mainly contain convenience food products
and agriculture products.

For convenience food products, cost of inventory
is determined using the weighted average cost method. Adjustments are recorded to write down the cost of inventory to the estimated net
realizable value due to slow-moving merchandise and damaged goods, which is dependent upon factors such as historical and forecasted consumer
demand, and promotional environment. The Company takes ownership, risks and rewards of the products purchased. Write-downs are recorded
in “cost of revenues” in the consolidated statements of operations and comprehensive loss.

For agriculture products, the costs including
but not limited to labor, fertilization, fuel, crop nutrition and irrigation, are capitalized into inventory throughout the respective
crop cycle. Such costs are expensed as cost of revenues when the crops are sold.

(m) Long-term investments

The Company’s long-term investments include
equity investments without readily determinable fair value.

The Company measures the equity investment without
readily determinable fair value at cost and adjusts for changes resulting from impairments and observable price changes in orderly transactions
for identical or similar securities of the same issuer. The Company considers information in periodic financial statements and other documentation
provided by the investees to determine whether observable price changes have occurred.

The Company makes a qualitative assessment considering
impairment indicators to evaluate whether the equity investment without a readily determinable fair value is impaired at each reporting
period. The Company also writes down to its fair value if a