Company: RETO
Filing Date: 2025-05-09
Form Type: 20-F
Source: 0001213900-25-041195
Chunk: 56

Company: ReTo Eco-Solutions, Inc.
Filing Date: 2025-05-09
Form: 20-F
Item: Item 19
Chunk 56
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 comprehensive income. Shipping and handling costs associated with the Company’s continuing operations were
$20,406, $11,333and $256for the years ended December 31, 2024, 2023 and 2022, respectively.

Government Grants

Government grants represent cash subsidies received
from the PRC government or related institutions. Cash subsidies which have no defined rules and regulations to govern the criteria necessary
for companies to enjoy the benefits are recognized as other income, net when received. Specific subsidies that local governments have
provided for a specific purpose, such as research and development, are recorded as other non-current liabilities when received and recognized
as other income or a reduction of related expense when the specific performance is met.

F-14

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Share-based Compensation

The Company accounts for share-based compensation
in accordance with ASC 718, Compensation - Stock Compensation (“ ASC 718”). In accordance with ASC 718, the Company determines
whether an award should be classified and accounted for as a liability award or an equity award. All the Company’s share-based awards
were classified as equity awards and are recognized in the consolidated financial statements based on their grant date fair values.

Income Taxes

The Company accounts for income taxes under ASC
740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated
financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including
the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The provisions of ASC 740-10-25, “ Accounting
for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and
measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition
of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest
and penalties associated with tax positions, and related disclosures. The