Company: CHOW
Filing Date: 2025-02-10
Form Type: DRS/A
Source: 0001493152-25-005658
Chunk: 91

Company: ChowChow Cloud International Holdings Ltd
Filing Date: 2025-02-10
Form: DRS/A
Chunk 91
---
 other external factors on customer creditworthiness.

Receivables are written off against the allowance when all reasonable collection efforts have been exhausted and our management determines that the likelihood of collection is remote. The timing of the write-off is based on specific criteria, including the length of time a receivable has been past due, customer bankruptcy, and other significant credit events.

As of December 31, 2022 and 2023, we had an allowance for expected credit losses of HK$842,674 and HK$493,720 (US$63,297), respectively. The reduction in the allowance reflects improvements in collection processes and positive shifts in economic conditions impacting our customers during the year.

Contract Assets and Contract Liabilities

Contract assets represent our right to consideration in exchange for goods or services that have been transferred to the customer, but for which billing has not yet occurred under the terms of the contract. We recognize contract assets when we satisfy a performance obligation and has a right to payment, but the payment is conditional on something other than the passage of time (e.g., future performance or acceptance of goods or services by the customer). We evaluate contract assets for expected credit losses in accordance with ASC 326 and measure at the net realizable value.

Contract liabilities represent the billings to date, as allowed under the terms of a contract, but not yet recognized as contract revenue using our revenue recognition policy. Contract liabilities arise when billings exceed the amount of revenue recognized based on our revenue recognition policy under ASC 606. We recognize revenue over time or at a point in time as performance obligations are satisfied, depending on the nature of the contract and the specific terms of the agreement.

We classify contract assets and liabilities as current or noncurrent depending on the timing of when the performance obligations are expected to be satisfied and when the related billings will occur. For contracts with multiple promises, we allocate the transaction price to each performance obligation based on relative stand-alone selling prices. We regularly review our estimates of transaction prices, performance obligations, and the progress toward satisfaction of those obligations.

Any significant changes in contract assets and liabilities are disclosed separately in the financial statements and are primarily driven by the timing of the satisfaction of performance obligations and the receipt of customer payments.

| 57 |

Recent Accounting Pronouncements

See the discussion of the recent accounting pronouncements contained in Note 2 to the financial statements, “Summary of Significant Accounting Policies.”

Six Months ended June 30, 2023 and 2024

Results of Operations

The following table sets forth a summary of