Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 229

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 19
Chunk 229
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 judgment to determine appropriate estimates and assumptions. Changes in these estimates
and assumptions could affect the calculation of the fair value of the investment and determination of whether any identified impairment
is other-than-temporary.

F-13

X3 HOLDINGS CO., LTD.

Note 2 - Summary of significant accounting
policies(continued)

Business combinations

The cost of an acquisition
is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments
issued. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities
acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any noncontrolling
interests. The excess of (i) the total of the cost of the acquisition, fair value of the noncontrolling interests and acquisition date
fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree
is recorded as goodwill. If the cost of acquisition is less than the fair value of the identifiable net assets of the acquiree, the difference
is recognized directly in earnings.

The determination and allocation
of fair values to the identifiable net assets acquired, liabilities assumed and noncontrolling interest is based on various assumptions
and valuation methodologies requiring considerable judgment. The most significant variables in these valuations are discount rates, terminal
values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the
cash inflows and outflows. The Group determines discount rates to be used based on the risk inherent in the acquiree’s current business
model and industry comparisons. Although the Group believes that the assumptions applied in the determination are reasonable based on
information available at the date of acquisition, actual results may differ from forecasted amounts and the differences could be material.

Goodwill

Goodwill is the cost of acquired
companies in excess of the fair value of identifiable net assets at acquisition date. Goodwill is not subject to amortization, but rather
is evaluated for impairment at least annually. The Group evaluates its goodwill for impairment during the fourth quarter of its fiscal
year or more frequently if indicators of potential impairment exist, in accordance with ASC 350, Intangibles - Goodwill and Other. Goodwill
impairment is determined by comparing the estimated fair value of a reporting unit (generally defined as the businesses for which financial
information