Company: SISI
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006895
Chunk: 32

Company: SHINECO, INC.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 1
Chunk 32
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reciation of these assets, on the same basis as other property assets, commences when the assets are ready
for their intended use.

Land Use Rights, Net

According to Chinese laws and regulations
regarding land use rights, land in urban districts is owned by the State, while land in the rural areas and suburban areas, except otherwise
provided for by the State, is collectively owned by individuals designated as resident farmers by the State. In accordance with the legal
principle that land ownership is separate from the right to the use of the land, the government grants individuals and companies the
rights to use parcels of land for a specified period of time. Land use rights, which are usually prepaid, are stated at cost less accumulated
amortization. Amortization is provided over the life of the land use rights, using the straight-line method. The useful life is 50 years,
based on the terms of the land use rights.

Long-lived Assets

Finite-lived assets and intangibles are
reviewed for impairment testing when circumstances require. For purposes of evaluating the recoverability of long-lived assets, when
undiscounted future cash flows will not be sufficient to recover an asset’s carrying amount, the asset is written down to its fair
value. The long-lived assets of the Company that are subject to evaluation consist primarily of property and equipment, land use rights,
ROU assets and investments. For the six and three months ended December 31, 2024 and 2023, the Company did not recognize any impairment
of its long-lived assets.

Derivative Financial Assets

Derivative financial assets are measured
at fair value and recognized as either assets or liabilities on the unaudited condensed consolidated balance sheets in either other current
or non-current assets or other current liabilities or non-current liabilities, depending upon maturity and commitment. Changes in the
fair value of derivatives are either recognized periodically in the unaudited condensed consolidated statements of comprehensive income
(loss) or in other comprehensive income (loss), depending on the use of the derivatives and whether they qualify for hedge accounting.

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The Company selectively uses financial
instruments to manage market risk associated with exposure to fluctuations in prices of raw materials for silk products. These financial
exposures are monitored and managed by the Company as an integral part of its risk management program. The Company does not engage in
derivative instruments for speculative or trading purposes. The Company’s derivative financial assets are not qualified for hedge
accounting. Thus, changes in fair