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)  (m) Financial instruments (Continued)  (n) Unit offerings (o) Standards, amendments and interpretations affecting the 2013 and future year-ends  Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the  substance of the contractual arrangement.  An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting  all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct  issue costs.  Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.  Other financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently  measured at amortized cost using the effective interest method, with interest expense recognized on an  effective yield basis.  The effective interest method is a method of calculating the amortized cost of a financial liability and of  allocating interest expenses over the corresponding period. The effective interest rate is the rate that  exactly discounts estimated future cash payments over the expected life of the financial liability, or, where  appropriate, a shorter period, to the net carrying amount on initial recognition.  The Company has classified trade and other payables, short-term financial liabilities and long-term  financial liabilities as other financial liabilities.  The Company derecognizes financial liabilities when, and only when, the Company’s obligations are  discharged, cancelled or expired.  Proceeds received on the issuance of units, consisting of common shares and warrants, are allocated first to common  shares based on the quoted market price of the common shares at the time the units are priced, then to warrants  based on the Black-Scholes option pricing model, with any remaining excess amount to the flow-through tax  premium as a liability.  The Company has not adopted the following revised standards and is currently assessing the impact that these  standards will have on the financial statements.  i. IFRS 9, “Financial Instruments” (2010), incorporates revised requirement for the classification and  measurement requirement of financial liabilities, and carries over the existing de-recognition requirements from  IAS 39, “Financial Instruments: Recognition and Measurement”. The revised financial liability provisions  maintain the existing amortized cost measurement basis for most liabilities. New requirements apply where an  entity chooses to measure a liability at FVPL; in these cases, the portion of the change in fair value related to  changes in the entity's own credit risk is presented in other comprehensive income rather than within profit or  loss. Applies to annual periods beginning on or after January 1, 2015, this standard supersedes IFRS 9 (2009).  However, for annual reporting periods beginning before January 1, 2015, an entity may early-adopt IFRS 9  (2009) instead of applying this standard.  (b)  Derecognition of financial liabilities  (a)  Other financial liabilities  - 14 -  ii. Financial liabilities and equity