Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 139

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 5
Chunk 139
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 be probable. Accounts receivable are considered impaired and written-off when it is probable that all contractual payments due will
not be collected after all collection efforts have been exhausted.

Intangible assets, net

Our intangible assets mainly
include capitalized development costs, purchased software and acquired software from business acquisitions. The Company follows the provisions
of Accounting Standards Codification (“ ASC”) 985-20, “ Costs of Software to be Sold, Leased, or Marketed.” ASC
985-20 provides guidance on capitalization of the costs of software developed or obtained for sold, leased, or marketed. The Company expenses
all costs incurred during the preliminary project stage of its development, and capitalizes costs incurred during the application development
stage. Costs incurred relating to upgrades and enhancements to the application are capitalized if it is determined that these upgrades
or enhancements add additional functionality to the application. The capitalized development cost is amortized on a straight-line basis
over the estimated useful life, which is generally five years. Management evaluates the useful lives of these assets on an annual basis
and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Impairment for long-lived assets other than goodwill

Long-lived assets, including
property, equipment, furniture and fixtures and intangible assets with finite lives are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying value of an asset may not be recoverable. When these events occur, the Company measures impairment
by comparing the carrying values of the long-lived assets to the estimated undiscounted future cash flows expected to result from the
use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amounts
of the assets, the Company would recognize an impairment loss based on the excess of the carrying value over the assessed discounted cash
flow amount. For the year ended December 31, 2024, due to slow development of Smartconn and Boxinrui, the Company evaluated the recoverability
of long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the
use of the assets and their eventual disposition and determined that the fair value of intangible assets of Smartconn and Boxinrui was
less than carrying value. Therefore, the Company impaired the intangible assets acquired from the acquisition of Smartconn and Boxinrui
of approximately $12.7 million and approximately $14.1 million for the year