Company: SISI
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010889
Chunk: 31

Company: SHINECO, INC.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 31
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 goodwill recognized
in a business combination. If the carrying amount of a reporting unit’s goodwill exceeds the implied fair value of that goodwill,
an impairment loss is recognized in an amount equal to that excess. For each of these tests, the fair value of each of the Company’s
reporting units is determined using a combination of valuation techniques, including a discounted cash flow methodology. To corroborate
the discounted cash flow analysis performed at each reporting unit, a market approach is utilized using observable market data such as
comparable companies in similar lines of business that are publicly traded or which are part of a public or private transaction (to the
extent available).

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Leases

Lessee accounting

The Company follows FASB ASC No. 842, Leases (“Topic
842”). The Company leases office spaces, warehouse, and farmland which are classified as operating leases in accordance with Topic
842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases, usually
with initial term of 12 months or less) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease
payments arising from a lease, measured on a discounted basis; and (ii) right-of-use (“ROU”) asset, which is an asset that
represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

Operating lease ROU assets and operating lease liabilities
are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the
Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available
at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments
made and excludes lease incentives and includes initial direct costs incurred. The Company’s lease terms may include options to
extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expenses for minimum lease
payments are recognized on a straight-line basis over the lease term. All operating lease ROU assets are reviewed for impairment annually.
For the nine and three months ended March 31, 2025 and 2024, the Company did not recognize any impairment of its ROU assets.

Lessor accounting

The Company rents out its office to a third party,
which is classified as an operating lease in accordance with Topic