Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 218

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 19
Chunk 218
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 value. The warrant liabilities and option liability are subject to remeasurement at each reporting period and the Company adjusted
the carrying value of the warrant liabilities and option liability to fair value at the end of each reporting period utilizing the binominal
option pricing model, with changes in estimated fair value included in the “changes in fair value of financial instruments”
on the consolidated statement of comprehensive loss.

(t) Fair Value Measurements

Fair value represents the price that would be
received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would
use in pricing an asset or a liability.

Accounting guidance defines fair value, establishes
a framework for measuring fair value and expands disclosures about fair value measurements. Accounting guidance establishes a three-level
fair value hierarchy and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of
input that is significant to the fair value measurement. The three levels of inputs are:

  Level 1      Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.  
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  Level 2      Include other inputs that are directly or indirectly observable in the marketplace.  
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  Level 3      Unobservable inputs which are supported by little or no market activity.  
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Accounting guidance also describes three main
approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost
approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable
assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement
is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that
would currently be required to replace an asset.

Financial assets and liabilities of the Company
primarily consist of cash and cash equivalents, restricted cash, accounts receivable, net, other receivables, deposits and amount due
from suppliers included