Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 199

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 19
Chunk 199
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 notes payable,
short-term debt, and other current liabilities approximate their fair market value based on the short-term maturity of these instruments.

Business combination

Business combinations are recorded using the acquisition
method of accounting. The Company uses a screen to evaluate whether a transaction should be accounted for as an acquisition and/or disposal
of a business versus assets. In order for a purchase to be considered an acquisition of a business, and receive business combination accounting
treatment, the set of transferred assets and activities must include, at a minimum, an input and a substantive process that together significantly
contribute to the ability to create outputs. If substantially all of the fair value of the gross assets acquired is concentrated in a
single identifiable asset or a group of similar identifiable assets, then the set of transferred assets and activities is not a business.

The purchase price of business acquisition is
allocated to the tangible assets, liabilities, identifiable intangible assets acquired and noncontrolling interest, if any, based on their
estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related
expenses and restructuring costs are expensed as incurred.

Where the consideration in an acquisition includes
contingent consideration and the payment of which depends on the achievement of certain specified conditions post-acquisition, the contingent
consideration is recognized and measured at its fair value at the acquisition date and if recorded as a liability, it is subsequently
carried at fair value with changes in fair value reflected in earnings.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and demand deposits,
which are unrestricted as to withdrawal and use that which have original maturities of three months or less when purchased.

F-14

Restricted cash, non-current

The Company, as an insurance agency, is required
to reserve10% of its registered capital in cash held in an escrow bank account pursuant to the China Banking and Insurance Regulatory
Commission (“ CBIRC”) rules and regulations, in order to protect insurance premium appropriation by insurance agency which
is restricted as to withdrawal for other than current operations. Thus, the Company classified the balance for guarantee deposit as a
non-current asset.

The Company acquired the insurance agency business
in December 2023. As of September 30, 2023 and 2024, the non-current restricted cash amounted to niland RMB5,000respectively.

Accounts receivable, net

Accounts receivable represents insurance agency service fee or commission
receivable on insurance products sold