Company: ALCE
Filing Date: 2025-01-27
Form Type: S-1
Source: 0001213900-25-007054
Chunk: 230

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-01-27
Form: S-1
Chunk 230
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 concern matters. Fair Value of Financial Instruments The Company measures its financial instruments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy are described below: Level 1 – Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 – Pricing inputs other than quoted prices in active markets included in Level 1 that are either directly or indirectly observable as of the reporting date. Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Level 3 – Pricing inputs that are unobservable. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques, and at least one significant model assumption or input is unobservable. The Company holds various financial instruments that are not required to be measured at fair value. For cash and cash equivalents, restricted cash, accounts receivable, various debt instruments, prepayments and other current assets, accounts payable, accrued liabilities and other current liabilities, the carrying value approximated their fair values due to the short-term maturity of these instruments. The Company’s forward purchase agreement asset is considered a Level 3 financial instrument at fair value and is described below (see Note 5). F-18

Business Combinations and Acquisition of Assets

The Company applies the definition
of a business in ASC 805, Business Combinations, to determine whether it is acquiring a business or a group of assets. When the
Company acquires a business, the purchase price is allocated to; (i) the acquired tangible assets and liabilities assumed, primarily
consisting of solar energy facilities and land, (ii) the identified intangible assets and liabilities, primarily consisting of favorable
and unfavorable rate Power Purchase Agreements (PPAs) and Renewable Energy Credit (REC) agreements, (iii) asset