Company: KPEA
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006580
Chunk: 50

Company: Kun Peng International Ltd.
Filing Date: 2025-02-14
Form: 10-Q
Item: Item 1
Chunk 50
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 steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its
obligations under each of its agreements:

●
identify the contract with a customer;

●
identify the performance obligations in the contract;

●
determine the transaction price;

●
allocate the transaction price to performance obligations in the contract; and

●
recognize revenue as the performance obligation is satisfied.

Consistent
with the criteria of ASC 606 “Revenue from Contracts with Customers,” we recognize revenue when performance obligations are
satisfied by transferring control of a promised good or service to a customer. For performance obligations that are satisfied at a point
in time, we also consider the following indicators to assess whether control of a promised good or service is transferred to the customer:
(i) right to payment, (ii) legal title, (iii) physical possession, (iv) significant risks and rewards of ownership, and (v) acceptance
of the good or service. For performance obligations satisfied over time, we recognize revenue over time by measuring the progress toward
complete satisfaction of a performance obligation.

Deferred
Revenue

Deferred
revenue results from transactions where the Company has received the payments from the customers but revenue recognition criteria under
the five-step model of ASC Topic 606 have yet to be met. Once all revenue recognition criteria have been satisfied, the revenues will
be recognized upon the transfer of risk and rewards to the customers in the consolidated statement of operations. We anticipated the
majority of the revenue will be recognized in the fiscal year 2025. Management agreed that the amount received is non-refundable; however,
this term is not bound by any agreement. Thus, the customers may have the rights to challenge and demand the advances to be refunded
under relevant Commercial Laws or regulations.

Lease

Under
ASC Topic 842, the Company determines if an arrangement is a lease at inception. Lease assets and liabilities are recognized at the present
value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future
lease payments is the Company’s incremental borrowing rate based on the information available at the lease commencement date. The
Company generally uses the base, non-cancelable lease term in calculating the right-of-use assets and lease liabilities.

The
Company may recognize the lease payments in the condensed consolidated statements of operation on a straight-line basis over the lease
terms and variable lease payments in the periods in which the obligations for those payments are incurred, if any. The lease