Company: GURE
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001193805-25-000461
Chunk: 396

Company: GULF RESOURCES, INC.
Filing Date: 2025-04-11
Form: 10-K
Item: Item 6
Chunk 396
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 property, plant and equipment.

(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 Company’s obligation to make lease payments
arising from the lease. Operating lease and finance lease ROU assets and liabilities are recognized at January 1, 2019 based on the present
value of lease payments over the lease term discounted using the rate implicit in the lease. In cases where the implicit rate is not readily
determinable, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the
present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has elected not to recognize
operating lease ROU assets and liabilities arising from short-term lease.

(p)      Basic and Diluted Earnings per Share of Common Stock

Basic earnings per common share
are based on the weighted average number of shares outstanding during the periods presented. Diluted earnings per share are computed using
weighted average number of common shares plus dilutive common share equivalents outstanding during the period. Potential common shares
that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive, i.e. the exercise prices of the
outstanding stock options were greater than the market price of the common stock. Anti-dilutive common stock equivalents which were excluded
from the calculation of number of dilutive common stock equivalents amounted to 0 and 0 shares for the years ended December 31, 2024 and
2023, respectively. These awards could be dilutive in the future if the market price of the common stock increases and is greater than
the exercise price of these awards.

(q)      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 “$”).

    F-13 

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED