Company: SISI
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006895
Chunk: 181

Company: SHINECO, INC.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 2
Chunk 181
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 326), Measurement
of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with an expected loss methodology that
is referred to as the current expected credit loss (“CECL”) methodology. The adoption of the credit loss accounting standard
has no material impact on our consolidated financial statements as of July 1, 2023.

49

Our
account receivables and other receivables included in other current assets on the unaudited condensed consolidated balance sheets are
within the scope of ASC Topic 326. We make estimates of expected credit and collectability trends for the allowance for credit losses
based upon assessment of various factors, including historical experience, the age of the accounts receivable and other receivables balances,
credit-worthiness of the customers and other debtors, current economic conditions, reasonable and supportable forecasts of future economic
conditions, and other factors that may affect its ability to collect from the customers and other debtors. We also provide specific provisions
for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.

ASC
Topic 326 is also applicable to loans to third parties that are included in the other current assets on the unaudited condensed consolidated
balance sheets. Management estimates the allowance for credit losses on loans that do not share similar risk characteristics on an individual
basis. The key factors considered when determining the above allowances for credit losses include estimated loan collection schedule,
discount rate, and assets and financial performance of the borrowers.

Expected
credit losses are recorded as general and administrative expenses on the unaudited condensed consolidated statements of income (loss)
and comprehensive income (loss). After all attempts to collect a receivable have failed, the receivable is written off against the allowance.
In the event we recover amounts previously reserved for, we will reduce the specific allowance for credit losses.

Inventories,
Net

Inventories,
which are stated at the lower of cost or net realizable value, consist of raw materials, work-in-progress, and finished goods related
to our products. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and
sell products. Cost is determined using the weighted average method. We periodically evaluate our inventory and records an inventory
reserve for certain inventories that may not be saleable or whose cost exceeds net realizable value. As of December 31, 2024 and June
30, 2024, the inventory reserve was nil and US$30,443, respectively.

Revenue