Company: GURE
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001193805-25-000461
Chunk: 470

Company: GULF RESOURCES, INC.
Filing Date: 2025-04-11
Form: 10-K
Item: Item 7
Chunk 470
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 critical estimates include:

·allowance for doubtful accounts, which impacts revenue;

·the valuation of inventory, which impacts gross margins;

·impairment of long-lived assets;

·the valuation and recognition of share-based compensation, which impacts operating expenses; and

·the recognition and measurement of deferred income taxes, which impact our provision for taxes.

Allowance for Doubtful Accounts

We make estimates of the uncollectibility
of accounts receivable, especially analyzing accounts receivable and historical bad debts, customer concentrations, customer credit-worthiness,
current economic trends and changes in customer payment terms, when evaluating the adequacy of the allowance for doubtful accounts. Credit
evaluations are undertaken for all major sale transactions before shipment is authorized. On a quarterly basis, we evaluate aged items
in the accounts receivable aging report and provide an allowance in an amount we deem adequate for doubtful accounts. If management were
to make different judgments or utilize different estimates, material differences in the amount of our reported operating expenses could
result.

Inventory Valuation

Inventory is stated at the lower
of cost or market, with cost determined on a first-in first-out basis. The carrying value of inventory is reduced for estimated obsolescence
by the difference between its cost and the estimated market value based upon assumptions about future demand. We evaluate the inventory
carrying value for potential excess and obsolete inventory exposures by analyzing historical and anticipated demand. If actual future
demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required in
the future, which could have a material adverse effect on our results of operations.

Depreciation of Property, Plant and Equipment

Property, plant and equipment
are stated at cost less accumulated depreciation and any impairment losses. Expenditures for new facilities or equipment, and major expenditures
for betterment of existing facilities or equipment are capitalized and depreciated using the straight-line method at rates sufficient
to depreciate such costs over the estimated productive lives. All other ordinary repair and maintenance costs are expensed as incurred.
Mineral rights are recorded at cost less accumulated depreciation and any impairment losses. Mineral rights are amortized ratably over
the term of the lease, or the equivalent term under the units of production method, whichever is shorter. In some situations, the life
of the asset may be extended or shortened if circumstances arise that would lead us to believe that the estimated life of the asset has
changed. The life of leasehold improvements may change based on the extension of lease contracts