Company: OSRH
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001213900-25-109054
Chunk: 12

Company: OSR Holdings, Inc.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 12
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, 2025, which is presented
in Korean won.

b.Principle of consolidation

The condensed consolidated financial
statements include the accounts of OSR Holdings, Inc. and its subsidiaries. All significant intercompany transactions and balances have
been eliminated in consolidation.

The Company consolidates entities in
which it has a controlling financial interest based on either the variable interest entity (VIE) or voting interest model. The Company
is required to first apply the VIE model to determine whether it holds a variable interest in an entity, and if so, whether the entity
is a VIE. If the Company determines it does not hold a variable interest in a VIE, it then applies the voting interest model. Under the
voting interest model, the Company consolidates an entity when it holds a majority voting interest in an entity.

The Company accounts for investments
in which it has significant influence but not a controlling financial interest using the equity method of accounting.

c.Use of estimates

The preparation of the condensed consolidated
financial statements in conformity with US-GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements
and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant
items subject to such estimates and assumptions include allowance for credit losses, valuation of inventories, valuation of deferred tax
assets, the useful lives of equipment and vehicles, lease liabilities and right-of-use assets, and other contingencies.

d.Cash and cash equivalents

The Group considers all highly liquid
financial instruments with original maturities of three months or less when purchased to be cash equivalents.

e.Allowance for credit losses

The Group records an allowance for credit
losses (ACL) under Subtopic 326-20 Financial Instruments - Credit Losses – Measured at Amortized Cost for the current expected
credit losses inherent in its financial assets measured at amortized cost and contract assets. The ACL is a valuation account deducted
from the amortized cost basis to present the net amount expected to be collected. The estimate of expected credit losses includes expected
recoveries of amounts previously written off as well as amounts expected to be written off.

7

Accounts receivable

The Group uses an aging schedule to
estimate the ACL for trade accounts receivable. This method categorizes trade receivables into different groups based on industry and
the number of days past due. Past due status is