Company: OCG
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043484
Chunk: 143

Company: Oriental Culture Holding LTD
Filing Date: 2025-05-15
Form: 20-F
Item: Item 19
Chunk 143
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rates that are expected to apply to the period when the asset is realized or the liability is settled.

F-17

ORIENTAL CULTURE HOLDING LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred taxes are charged or credited in the
income statement, except when it is related to items credited or charged directly to equity. Net deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the net deferred tax
assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

An uncertain tax position is recognized as a benefit
only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination
being presumed to occur. The amount recognized is the largest amount of tax benefit that has a greater than 50% likelihood of being realized
on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest
incurred related to underpayment of income taxes are classified as income tax expense in the period incurred. PRC tax returns filed in
2023 are subject to examination by the applicable tax authorities. Tax returns filed in Hong Kong from 2020 to 2023 are subject to examination.

Leases

The Company adopted FASB ASU 2016-02, “ Leases”
(Topic 842) for the year ended December 31, 2021, and elected the practical expedients that does not require us to reassess: (1)
whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3)
initial direct costs for any expired or existing leases. For lease terms of twelve months or less, a lessee is permitted to make an accounting
policy election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to
treat the lease and non-lease components of a lease as a single lease component. Upon adoption, the Company recognized $34,608of
a right of use (“ ROU”) assets and same amount of lease liabilities based on the present value of the future minimum rental
payments of leases, using an incremental borrowing rate of4.75% based on the duration of lease terms.

Operating lease ROU assets and