Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 210

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 19
Chunk 210
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 of the voting power; or (ii) the Company has the power to appoint or remove the majority
of the members of the board of directors or to cast a majority of votes at the meetings of the board of directors or to govern the financial
and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders.

F-27

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(cont.)

(d) Use of Estimates

The preparation of the consolidated financial
statements in accordance with U. S GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, related disclosures of contingent assets and liabilities at the balance sheet dates, and the reported revenues and expenses
during the reported periods in the consolidated financial statements and accompanying notes.

Estimates are used for, but not limited to, valuation
allowance for deferred tax assets, assessment for impairment of goodwill, long-lived assets and long-term investments, allowance for doubtful
accounts, lower of cost and net realizable value of inventories, useful lives of property, plant and equipment and intangible assets,
commitments and contingencies, the fair values of financial instruments including redeemable convertible preferred shares, convertible
loans, warrant liabilities, 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