Company: SERV
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001832483-25-000038
Chunk: 24

Company: Serve Robotics Inc. /DE/
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 1
Chunk 24
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 March 31, 2025 and December 31, 2024, the Company determined there was no allowance for credit loss necessary.Property and EquipmentProperty and equipment are stated at cost less accumulated depreciation. Depreciation expense is recognized using the straight-line method over the estimated useful life of the asset, which is two (2) to four (4) years for office equipment and two (2) years for the Company’s robot assets. Estimated useful lives are periodically assessed to determine if changes are appropriate. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation or amortization are eliminated from the balance sheets and any resulting gains or losses are included in the statement of operations in the period of disposal. As of March 31, 2025, certain amounts previously categorized as inventory have been reclassified as Property and Equipment. The reclassification had an immaterial impact on our condensed consolidated balance sheets.

7

LeasesThe Company accounts for leases under ASC 842 – Leases. The Company does not apply the recognition requirements for leases with a term of twelve months or less.The Company determines if an arrangement is a lease, or includes an embedded lease, at inception for each contract or agreement. A contract is or contains an embedded lease if the contract meets all of the below criteria:(i)there is an identified asset;(ii)the Company obtains substantially all of the economic benefits of the asset; and(iii)the Company has the right to direct the use of the asset.The Company’s operating lease agreements include office and warehouse space, and cargo vans. "ROU assets" represent the right to use an underlying asset for the lease term and operating lease liabilities represent the obligation to make payments arising from the lease or embedded lease. Operating lease ROU assets and operating lease liabilities are recognized at commencement date based on the present value of the future minimum lease payments over the lease term. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate that is based on the estimated rate of interest for a collateralized borrowing of a similar asset, using a similar term as the lease payments at the commencement date. Indirect capital costs are capitalized and included in the ROU assets at commencement.The operating lease ROU assets and operating lease liabilities include any lease payments made, including any variable amounts that are based on an index or rate, and exclude lease incentives. Variability that is not due to an index or rate, such as payments made based on hourly