Company: SISI
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010889
Chunk: 36

Company: SHINECO, INC.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 36
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 was issued
to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or
analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of The Act. In accordance
with SAB 118, additional work is necessary to do a more detailed analysis of The Act as well as potential correlative adjustments. Any
subsequent adjustment to these amounts will be recorded to current tax expense in fiscal 2019 when the analysis is complete. The Company
elects to pay the transition tax over an eight-year period using specified percentages (eight percent per year for the first five years,
15 percent in year six, 20 percent in year seven, and 25 percent in year eight).

    16

Value-Added Tax

Sales revenue represents the invoiced value of goods,
net of a value-added tax (“VAT”). All of the Company’s products that were sold in the PRC were subject to a Chinese
value-added tax at rates ranging from 3% to 13%, depending on the type of products sold. For overseas sales, VAT is exempted on the exported
goods. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing finished
products or acquiring finished products. The Company records a VAT payable or VAT receivable in the accompanying unaudited condensed consolidated
financial statements.

Foreign Currency Translation

The Company uses the United States dollar (“U.S.
dollars,” “USD,” or “US$”) for financial reporting purposes. The Company’s subsidiaries and VIEs maintain
their books and records in their functional currency of Renminbi (“RMB”), the currency of the PRC.

In general, for consolidation purposes, the Company
translates the assets and liabilities of its subsidiaries and VIEs into U.S. dollars using the applicable exchange rates prevailing at
the balance sheet date, and the statements of income and cash flows are translated at average exchange rates during the reporting periods.
As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes
in the corresponding balances on the balance sheet. Equity accounts are translated at historical rates. Adjustments resulting from the
translation of the financial statements of the subsidiaries and VIEs are recorded as accumulated other comprehensive loss.

The balance sheet amounts, with the exception of equity,
as of March 31, 2025 and June 30,