Company: SISI
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006895
Chunk: 29

Company: SHINECO, INC.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 1
Chunk 29
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and other factors that may affect its ability to collect from the customers and other debtors. The Company also provides specific provisions
for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.

ASC Topic 326 is also applicable to loans
to third parties that are included in the other current assets on the unaudited condensed consolidated balance sheets. Management estimates
the allowance for credit losses on loans that do not share similar risk characteristics on an individual basis. The key factors considered
when determining the above allowances for credit losses include estimated loan collection schedule, discount rate, and assets and financial
performance of the borrowers.

Expected credit losses are recorded as
general and administrative expenses on the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss).
After all attempts to collect a receivable have failed, the receivable is written off against the allowance. In the event the Company
recovers amount previously reserved, the Company will reduce the specific allowance for credit losses. 

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Inventories, Net

Inventories, which are stated at the
lower of cost or net realizable value, consist of raw materials, work-in-progress, and finished goods related to the Company’s
products. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products.
Cost is determined using the weighted average method. The Company periodically evaluates its inventory and records an inventory reserve
for certain inventories that may not be saleable or whose cost exceeds net realizable value. As of December 31, 2024 and June 30, 2024,
the inventory reserve was nil and US$30,443, respectively.

Business Acquisitions

Business acquisitions are accounted for
under the acquisition method. The acquisition method requires the reporting entity to identify the acquirer, determine the acquisition
date, recognize and measure the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquired
entity, and recognize and measure goodwill or a bargain gain from the purchase. The acquiree’s results are included in the Company’s
consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values
on the date acquired and the excess of the purchase price over the amounts assigned is recorded as goodwill, or if the fair value of
the net assets acquired exceeds the purchase price consideration, a bargain purchase gain is recorded. Adjustments to fair value assessments
are generally recorded to goodwill over the measurement