Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 216

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 19
Chunk 216
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, the option liability, the shareholders’ loans, the share-based compensation, the fair value of contingent
consideration, the purchase price allocation with respect to business combinations, and the fair value of ordinary shares to determine
fair value of share options. Incremental borrowing rate of leases, and the length of lease terms which vary and often include renewal
options, are important factor in determining the appropriate accounting for leases including the initial classification of the lease as
finance (referred to as “capital leases” prior to the adoption of Accounting Standards Update (“ ASU”) No. 2016-02,
Leases (ASC 842)) or operating and the recognition of rent expense over the duration of the lease.

Actual results could differ from those estimates,
and as such, differences may be material to the consolidated financial statements.

(e) Foreign Currency and foreign
currency translation

The Company’s reporting currency is Renminbi
(“ RMB”). The functional currency of the Company’s entities incorporated in Cayman Islands is U. S. dollars (“ US$”),
and that of the Company’s entities incorporated in Hong Kong is H. K dollars (“ HK$”). The Company’s PRC subsidiaries
and consolidated VIEs determined their functional currency to be Renminbi (“ RMB”).

Transactions denominated in currencies other than
functional currency are translated into functional currency at the exchange rates quoted by authoritative banks prevailing at the dates
of the transactions. Exchange gains and losses resulting from those foreign currency transactions denominated in a currency other than
the functional currency are recorded as “ Foreign currency exchange gain/(loss), net” in the consolidated statements of operations
and comprehensive loss.

The consolidated financial statements of the Company
are translated from the respective functional currencies into RMB. Assets and liabilities are translated into RMB using the applicable
exchange rates at the balance sheet date. Equity accounts other than earnings generated in current period are translated into RMB at the
appropriate historical rates. Revenues, expenses, gains and losses are translated into RMB using the periodic average exchange rates.
The resulting foreign currency translation adjustments are recorded in accumulated other comprehensive loss as a component of shareholders’
equity.

(f) Convenience translation

Translations of the consolidated financial statements
from RMB into US$ for the year ended December 31, 2023 are solely for the convenience of the readers and were calculated at the rate
of US US$1.00=RMB7.0999, representing the noon buying rate in The City of New York for cable transfers