COMMANDER RESOURCES LTD.  (An Exploration Stage Company)  Notes to Financial Statements  For the Years Ended December 31, 2012 and 2011  (Expressed in Canadian dollars)  3.  Summary of Significant Accounting Policies (Continued)  (f) Property and equipment (Continued)  iii.  Reversal of impairment  (g)  Provisions  (h) Asset retirement obligations  - 10 -  At present, the Company has determined that it has no material asset retirement obligations to record in these  financial statements. The costs of rehabilitation projects that were included in the rehabilitation provision are recorded against the  provision as incurred. The cost of ongoing current programs to prevent and control pollution is charged to the  statement of income as incurred. The net present value of restoration costs arising from subsequent site damage that is incurred on an ongoing basis  during production are charged to the statement of income in the period incurred. Changes in the net present value, excluding changes in the Company’s estimates of reclamation costs, are charged to  the statement of income. The Company’s estimates of reclamation costs could change as a result of changes in regulatory requirements,  discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are  recorded directly to mining assets with a corresponding entry to the rehabilitation provision. The Company’s  estimates are reviewed annually for changes in regulatory requirements, discount rates, effects of inflation and  changes in estimates.  The Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the  retirement of property and equipment, or site closure or reclamation activities when those obligations result from the  acquisition, construction, development or normal operation of the assets. The net present value of future  rehabilitation cost estimates arising from site preparation work is capitalized to mining assets along with a  corresponding increase in the rehabilitation provision in the period incurred. Discount rates using a pre-tax rate that  reflect the time value of money are used to calculate the net present value. The rehabilitation asset is depreciated on  the same basis as mining assets.  The amount recognized as a provision is the best estimate of the consideration required to settle the present  obligation at the statement of financial position date, taking into account the risks and uncertainties surrounding the  obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying  amount is the present value of those cash flows. When some or all of the economic benefits required to settle a  provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually  certain that reimbursement will be received and the amount receivable can be measured reliably.  Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is  probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a  reliable estimate of the amount of the obligation can be made.  An impairment loss is reversed if there is an indication that there has been a change in the estimates used to  determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s  carrying amount does not exceed the carrying amount that would have been determined, net of depreciation  or amortization, if no impairment loss had been recognized. An impairment loss with respect to goodwill is  never reversed. 