Company: GURE
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001193805-25-000461
Chunk: 299

Company: GULF RESOURCES, INC.
Filing Date: 2025-04-11
Form: 10-K
Item: Item 5
Chunk 299
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 lease, which is 20 years.

Producing oil and gas properties
are depreciated on a unit-of-production basis over the proved developed reserves. Common facilities that are built specifically to service
production directly attributed to designated oil and gas properties are depreciated based on the proved developed reserves of the respective
oil and gas properties on a pro-rata basis. Common facilities that are not built specifically to service identified oil and gas properties
are depreciated using the straight-line method over their estimated useful lives. Costs associated with significant development projects
are not depreciated until commercial production commences and the reserves related to those costs are excluded from the calculation of
depreciation.

(k)      Asset Retirement Obligation

The Company follows Financial
Accounting Standards Board Accounting Standards Codification (“FASB ASC”), which established a uniform methodology for accounting
for estimated reclamation and abandonment costs. FASB ASC 410 requires the fair value of a liability for an asset retirement obligation
to be recognized in the period in which the legal obligation associated with the retirement of the long-lived asset is incurred. When
the liability is initially recorded, the offset is capitalized by increasing the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the
related asset. To settle the liability, the obligation is paid, and to the extent there is a difference between the liability and the
amount of cash paid, a gain or loss upon settlement is recorded.

    F-11 

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

Currently, there are no reclamation
or abandonment obligations associated with the land being utilized for exploitation by the bromine and crude salt factories. Also, for
the two chemical plants that are to be relocated, currently, there are no obligations to restore the land to its original condition.

(l)      Recoverability of Long-lived Assets

In accordance with Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10-35”Impairment or
Disposal of Long-lived Assets”, long-lived assets to be held and