Company: TOP
Filing Date: 2025-08-13
Form Type: 20-F
Source: 0001213900-25-075728
Chunk: 100

Company: TOP Financial Group Ltd
Filing Date: 2025-08-13
Form: 20-F
Item: Item 19
Chunk 100
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 may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset
to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment
recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No

F-12

TOP
Financial Group Limited

Notes
to Consolidated Financial Statements

For
the Years Ended March 31, 2025, 2024 and 2023

2.
Summary of Significant Accounting Policies (Continued)

Operating
leases

Under
Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases) on the commencement
date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted
basis; and (ii) right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified
asset for the lease term.

At
the commencement date of the lease agreement between the Company and the third party lessor, the Company recognizes the lease liability
at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot
be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The right-of-use asset
is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred,
consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment.
There was no impairment for right-of-use lease assets as of March 31, 2025 and 2024.

The
Company also elected the short-term lease recognition exemption and will not recognize right of use assets or lease liabilities for leases
with a term less than 12 months.

Payables
to customers

Payables
to customers arise from the business of dealing in futures and investment securities. Payables to customers represent payables related
to the Company’s customer trading activities, which include the cash deposits received by the Company as requested by third party
broker-dealers to place with them in order to cover the positions taken by its customers, clearing house payables due on pending trades
and payable on demand, as well as the bank balances