Company: BOF
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010566
Chunk: 12

Company: BranchOut Food Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 12
---
 the relevant sections of ASC Topic 815-40,
Derivative Instruments and Hedging: Contracts in Entity’s Own Equity.

The
result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and
is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability,
the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of
a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.
Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified
to a liability account at the fair value of the instrument on the reclassification date.

    9

BRANCHOUT
FOOD INC.

NOTES
TO THE CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Revenue
Recognition

The
Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customer. Under ASC 606, the Company recognizes
revenue from the sale of its plant-based snack products in accordance with a five-step model in which the Company evaluates the transfer
of promised goods or services and recognizes revenue when customers obtain control of promised goods or services in an amount that reflects
the consideration which the Company expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition
for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify
the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate
the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance
obligation. The Company has elected, as a practical expedient, to account for the shipping and handling as fulfillment costs, rather
than as separate performance obligations, and the related costs are recorded as selling expenses in general and administrative expenses
in the statement of operations. Revenue is reported net of applicable provisions for discounts, returns and allowances. Methodologies
for determining these provisions are dependent on customer pricing and promotional practices. The Company records reductions to revenue
for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates are based
on industry-based historical