Company: GURE
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001193805-25-000461
Chunk: 495

Company: GULF RESOURCES, INC.
Filing Date: 2025-04-11
Form: 10-K
Item: Item 7A
Chunk 495
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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.

ASC Topic 820 defines fair value
as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date
in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability.

ASC Topic 820 specifies a hierarchy
of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy
is as follows:

Level 1 inputs to the valuation methodology
are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs to the valuation
methodology include quoted prices for identical or similar assets and liabilities in active markets or in inactive markets, and inputs
that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3 inputs to the valuation methodology
are unobservable and significant to the fair value.

The carrying amounts of the Company’s
financial instruments approximate their fair values because of their short-term nature. The Company’s financial instruments include
cash, accounts receivable, amounts due to related parties, accounts payable and other current payables. There were no material unrecognized
financial assets and liabilities as of December 31, 2024 and 2023.

(v)