Company: GURE
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001193805-25-000461
Chunk: 98

Company: GULF RESOURCES, INC.
Filing Date: 2025-04-11
Form: 10-K
Item: Item 1B
Chunk 98
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. Deferred tax assets and liabilities are
measured using tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected
to be realized or settled. The deferred income tax effects of a change in tax rates are recognized in the period of enactment. If it is
more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. The guidance
also provides criteria for the recognition, measurement, presentation and disclosures of uncertain tax positions. A tax benefit from an
uncertain tax position may be recognized if it is “more likely than not” that the position is sustainable based solely on
its technical merits. Interests and penalties associated with unrecognized tax benefits are included within the (benefit from) provision
for income tax in the consolidated statement of comprehensive income (loss).

(t)      Exploration Costs

Exploration costs, which included
the cost of researching for appropriate places to drill wells and the cost of well drilling in search of potential natural brine or other
resources, are charged to the income statement as incurred. Once the commercial viability of a project has been confirmed, all subsequent
costs are capitalized.

    F-14 

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2024

(Expressed in U.S. dollars)

NOTE 1 – BASIS OF PRESENTATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

For oil and gas properties, the
successful efforts method of accounting is adopted. The Company carries exploratory well costs as an asset when the well has found a sufficient
quantity of reserves to justify its completion as a producing well and where the Company is making sufficient progress assessing the reserves
and the economic and operating viability of the project. Exploratory well costs not meeting these criteria are charged to expenses. Exploratory
wells that discover potentially economic reserves in areas where major capital expenditure will be required before production would begin
and when the major capital expenditure depends upon the successful completion of further exploratory work remain capitalized and are reviewed
periodically for impairment.

(u)      Fair Value Measurement

The Company applies Accounting
Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures which defines fair value, establishes a
framework for measuring fair value and expands financial statement disclosure requirements for fair value measurements