Company: ASC
Filing Date: 2025-03-07
Form Type: 20-F
Source: 0001558370-25-002500
Chunk: 116

Company: Ardmore Shipping Corp
Filing Date: 2025-03-07
Form: 20-F
Item: Item 5
Chunk 116
---
 in the supply of and demand for crude oil and tanker capacity and, more recently from, disruptions and trading pattern changes related to Russia’s invasion of Ukraine and conflicts in the Arabian Gulf region related to the Hamas-Israel War and attacks on merchant vessels in the Red Sea area by Houthi rebels in Yemen.

For other trends affecting our business, please see the other discussions above in this Item 4 (“ Information on the Company - Business Overview - The International Product and Chemical Tanker Industry”) and Item 5 (“ Operating and Financial Review and Prospects”).

E. Critical Accounting Estimates

In the application of our accounting policies, which are prepared in conformity with U. S. GAAP, we are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities, and revenue and expenses that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The significant judgments and estimates are as follows:

Revenue recognition. Revenue, net is generated from spot charter arrangements and time charter arrangements.

Spot charter arrangements

In our spot charter arrangements, the charterer hires a vessel to transport a specific agreed-upon cargo for a single voyage that are generally short in duration (less than two months), which may contain multiple load ports and discharge ports. The consideration in such a contract is determined on the basis of a freight rate per metric ton of cargo carried or occasionally on a lump sum basis. The contract generally has standard payment terms of freight paid within three to seven days after completion of loading.

Spot charter arrangements do not contain a lease and are therefore considered service contracts that fall under the provisions of Accounting Standard Codification (“ ASC”) 606 Revenue from Contracts with Customers. Spot charter arrangements are considered service contracts which fall under the provisions of ASC 606 because we retain control over the operations of the vessel, including directing the routes taken and vessel speed. We determined that a spot charter arrangement includes a single performance obligation, which is to provide the charterer with an integrated transportation service within a specified time period. In addition, we have concluded that a contract for a spot charter arrangement meets the criteria to recognize revenue over time because the charterer simultaneously receives and consumes the