Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 219

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 19
Chunk 219
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 in prepayments and other current assets, long-term investments, other non-current assets, bank borrowings, accounts
payable, amounts due to related parties, loans and other payables included in accrued expenses and other current liabilities, warrant
liabilities, convertible loans and shareholder loans. Warrant liabilities, an option liability and certain convertible loans elected fair
value option were measured at fair value using unobservable inputs and categorized in Level 3 of the fair value hierarchy. As of December 31,
2022 and 2023, the carrying amount of other financial instruments approximated to their fair values due to the short-term maturity of
these instruments.

The Company’s non-financial assets, such
as goodwill, intangible assets, property, plant and equipment and inventories, would be measured at fair value only if they were determined
to be impaired.

F-35

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(cont.)

(u) Revenue recognition

The Company’s revenue is recognized when
control of the promised goods or service is transferred to the customer in an amount that reflects the consideration expected to receive
in exchange for those goods or services, after considering estimated sales return allowances, and value added tax (“ VAT”).
The Company follows five steps for revenue recognition: (i) identify the contract(s) with a customer, (ii) identify the
performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance
obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

Revenue is primarily derived from (i) online
products sales to individual customers or small retailers through third-party E-commerce platforms (ii) offline products sales to
various distributors, e. g. offline retail chains or supermarkets who then sell to end customers, (iii) advertising services to customers
with well-known brand names in lifestyle-related industries, (iv) cooking classes in the branded experience stores operated by the
Company and (v) providing management services in collaborative arrangements.

The Company evaluates whether it is appropriate
to record the gross amount of products sales and, advertising services and related costs or the net amount earned as commissions. When
the Company is a principal, that the Company obtains control of the specified goods or services before they are transferred to the customers,
revenue should be recognized in the gross amount of consideration to which it expects to be entitled in exchange for the specified goods
or services transferred. When the