Company: LICN
Filing Date: 2025-04-29
Form Type: 20-F
Source: 0001213900-25-036244
Chunk: 37

Company: Lichen International Ltd
Filing Date: 2025-04-29
Form: 20-F
Item: Item 4A
Chunk 37
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ed using the acquisition method of accounting. The assets acquired, the liabilities assumed, and any non-controlling interests of
the acquiree at the acquisition date, if any, are measured at their fair values as of the acquisition date. Goodwill is recognized and
measured as the excess of the total consideration transferred plus the fair value of any non-controlling interest of the acquiree and
fair value of previously held equity interest in the acquiree, if any, at the acquisition date over the fair values of the identifiable
net assets acquired. Common forms of the consideration made in acquisitions include cash and common equity instruments. Consideration
transferred in a business acquisition is measured at the fair value as of the date of acquisition. Acquisition-related expenses and restructuring
costs are expensed as incurred.

Accounting Standards Codification
(“ ASC”) 805 establishes a measurement period to provide the Company with a reasonable amount of time to obtain the information
necessary to identify and measure various items in a business combination and cannot extend beyond one year from the acquisition date.

Goodwill

Goodwill represents the excess
of the purchase price over the fair value of the identifiable assets and liabilities acquired in a business combination.

Goodwill is not depreciated
or amortized but is tested for impairment on an annual basis as of December 31, and in between annual tests when an event occurs or circumstances
change that could indicate that the asset might be impaired. In accordance with the FASB ASC 350 guidance on “ Testing of Goodwill
for Impairment”, a company first has the option to assess qualitative factors to determine whether it is more likely than not that
the fair value of a reporting unit is less than its carrying amount. If the company decides, as a result of its qualitative assessment,
that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment
test is mandatory. Otherwise, no further testing is required. The quantitative impairment test consists of a comparison of the fair value
of each reporting unit with its carrying amount, including goodwill. If the carrying amount of each reporting unit exceeds its fair value,
an impairment loss equal to the difference between the fair value of the reporting unit and the carrying amount will be recorded. Application
of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets
and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. The
judgment in estimating the