27 | P a g e 2. Significant Accounting Policies (continued)  h. Income taxes  i. Loss per share  j. Stock-based compensation  k. Asset retirement obligation (“ARO”)  All capitalized costs are reviewed, on a property-by-property basis, to consider whether there are any conditions that may  indicate impairment. Mineral property interests are reviewed at least annually or when otherwise appropriate for impairment  or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. When the carrying  value of a property exceeds its net recoverable amount (as estimated by quantifiable evidence of an economic geological  resource or reserve or by reference to option or joint venture expenditure commitments) or when, in the Company's  assessment, it will be unable to sell the property for an amount greater than the deferred costs, the property is written down  for the impairment in value.  From time to time, the Company may acquire or dispose of a mineral property interest pursuant to the terms of an option  agreement. As such options are exercisable entirely at the discretion of the optionees, the amounts payable or receivable are  not recorded at the time of the agreement. Option payments are recorded as property costs or recoveries when the payments  are made or received.  Income taxes are accounted for using the asset and liability method. Under this method, future income tax assets and liabilities  are determined based on differences between the financial statement carrying values and their respective income tax bases.  The amount of future income tax assets recognized is limited to the extent that they are considered, more likely than not, to be  realized. Future tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to  taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on future  tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or  substantive enactment.  Basic loss per share is calculated using the weighted average number of common shares outstanding during the period. Diluted loss per share is calculated using the treasury stock method. Under the treasury stock method, the weighted average  number of shares outstanding used in the calculation of diluted loss per share assumes that the deemed proceeds received  from the exercise of stock options, agents’ options, share purchase warrants and similar instruments that are “in the money”  would be used to repurchase common shares of the Company at the average market price during the year. Common share  equivalents consisting of stock options and warrants are not considered in the computation of diluted loss per share where  their effect would be anti-dilutive. Shares held in escrow, other than where their release is subject to the passage of time, are not included in the calculation of  the weighted average number of common shares outstanding.  The Company accounts for stock purchase options granted to directors, employees and consultants and other stock-based  payments using the fair value based method. Under this method, compensation expense for options granted is determined  based on estimated fair values of the options using the Black-Scholes option pricing model. For employees and directors, the  fair value of the options is measured at the time of grant. For non-employees the fair value of the options is measured at the  time of grant if they are fully vested and non-forfeitable, or the earlier of the date the performance is completed or the  performance commitment is reached. The cost is recognized over the vesting or service period of the respective options and,  with a corresponding increase to contributed surplus, is either capitalized to mineral property interests for grants to individuals  working directly on mineral projects, capitalized to construction costs for grants to individuals working directly on construction  of Selinsing or charged against operations otherwise. When stock options are exercised, the corresponding fair value is  transferred from contributed surplus to share capital.  The Company recognizes an estimate of the liability associated with an ARO in the financial statements at the time the liability  is incurred. The estimated fair value of the ARO is recorded as a long-term liability, with a corresponding increase in the carrying  amount of the related asset. The capitalized amount is depleted on the basis and at rates consistent with the corresponding  asset. The liability amount is increased each reporting period due to the passage of time and the amount of accretion is charged  to earnings in the period or capitalized to the cost of the corresponding assets until the assets are substantially put into use.  The ARO can also increase or decrease due to changes in the estimates of timing of cash flows or changes in the original  estimated undiscounted cost. Actual costs incurred upon settlement of the ARO are charged against the ARO to the extent of  the liability recorded. Notes to Consolidated Financial Statements For the years ended June 30, 2010 and 2009 MONUMENT MINING LIMITED