Company: GURE
Filing Date: 2025-05-13
Form Type: 10-Q
Source: 0001193805-25-000638
Chunk: 9

Company: GULF RESOURCES, INC.
Filing Date: 2025-05-13
Form: 10-Q
Item: Part I, Item 1
Chunk 9
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 were anti-dilutive, therefore
the amounts reported for basic and diluted loss per share were the same.

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES - Continued

(l) Reporting
Currency and Translation

The financial statements of the Company’s
foreign subsidiaries are measured using the local currency, Renminbi (“ RMB”), as the functional currency; whereas the functional
currency and reporting currency of the Company is the United States dollar (“ USD” or “$”).

As such, the Company uses the “current rate
method” to translate its PRC operations from RMB into USD, as required under FASB ASC 830 “ Foreign Currency Matters”.
The assets and liabilities of its PRC operations are translated into USD using the rate of exchange prevailing at the balance sheet date.
The capital accounts are translated at the historical rate. Adjustments resulting from the translation of the balance sheets of the Company’s
PRC subsidiaries are recorded in stockholders’ equity as part of accumulated other comprehensive income. The statement of income
and comprehensive income is translated at average rate during the reporting period. Gains or losses resulting from transactions in currencies
other than the functional currencies are recognized in net income for the reporting periods as part of general and administrative expense.
The statement of cash flows is translated at average rate during the reporting period, with the exception of the consideration paid for
the acquisition of business which is translated at historical rates.

(m) Foreign
Operations

All of the Company’s operations and assets
are located in PRC. The Company may be adversely affected by possible political or economic events in this country. The
effect of these factors cannot be accurately predicted.

(n) Inventories

Inventories are stated at the lower of cost, determined
on a first-in first-out cost basis, or net realizable value. Costs of work-in-progress and finished goods comprise direct materials, direct
labor and an attributable portion of manufacturing overhead. Net realizable value is based on estimated selling price less costs to complete
and selling expenses.

(o) Leases

The Company determines if an arrangement is a
lease at inception. Operating leases are included in operating lease right-of-use (“ ROU”) assets and operating lease liabilities
in the consolidated balance sheets. Finance leases are included in finance lease ROU assets and finance lease liabilities in the consolidated
balance sheets.

ROU assets represent the Company’s right
to use an underlying asset for the lease term and lease liabilities represent the