Company: SISI
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010889
Chunk: 29

Company: SHINECO, INC.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 29
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2025 and June 30, 2024, the allowance for uncollectible advances to suppliers
from the continuing operations was US$37,008 and US$5,225, respectively. As of March 31, 2025 and June 30, 2024, the allowance for
uncollectible advances to suppliers from the discontinued operations was US$5,212,862 and US$106,258, respectively.

Credit Losses

On July 1, 2023, the Company adopted Accounting Standards
Update 2016-13 “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,”
which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss
(“CECL”) methodology. The adoption of the credit loss accounting standard has no material impact on the Company’s consolidated
financial statements as of the adoption date.

The Company’s account receivables and other
receivables included in other current assets on the unaudited condensed consolidated balance sheets are within the scope of ASC Topic
326. The Company makes estimates of expected credit and collectability trends for the allowance for credit losses based upon assessment
of various factors, including historical experience, the age of the accounts receivable and other receivables balances, credit-worthiness
of the customers and other debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, 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.

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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 loss and comprehensive 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. 

Inventories, Net

In