NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS During 2004 and 2006, the Company entered into two four-year contracts to provide sponsorship and  advertising to a related company at a cost of $1,300,000. These contracts have been extended and include  annual costs of $325,000 for 2013 (2012 - $325,000).  The Company leases its office space at an annual cost of approximately $584,000 per year. This lease expires  on December 31, 2014. At December 31, 2013, the Company had capital expenditure commitments of $22,104,000 due in 2014  (2012 – $5,796,000 due in 2013). Drilling rigs are subject to certain minimum annual depreciation. Commencing in the fourth quarter of 2013,  in certain instances in which rigs are inactive for extended periods, the depreciation rate was accelerated. In  2013 this change resulted in an increase of $25,000 to depreciation expense. The Company has adopted the following new and revised standards, effective January 1, 2013. These changes  were made in accordance with the applicable transitional provisions. The Company has reclassified its investment in its joint ventures from jointly controlled entities to  joint ventures. The Company’s interests in its joint ventures were previously accounted for using the  proportionate consolidation method and now are being accounted for using the equity method. As a  result of this change in accounting policy, the investments in joint ventures at January 1, 2012 have  been recognized at the net carrying amount of the assets and liabilities of the joint ventures previously  proportionately consolidated by the Company. The Company assessed whether the investments were  impaired as at January 1, 2012 and determined no impairment existed. Subsequent to January 1, 2012,  the Company has accounted for its investments using the equity method of accounting.  The adjustments for each financial statement line item affected are presented in the tables on the  following pages. 59 AKITA DRILLING LTD.  ANNUAL REPORT 22. Changes in Accounting Policies and Estimates a. IFRS 11, “Joint Arrangements” b.  IAS 19, “Employee Benefits”  IFRS 11 supersedes IAS 31, “Interests in Joint Ventures”, and requires joint arrangements to be classified  either as joint operations or joint ventures depending on the contractual rights and obligations of each  investor that jointly controls the arrangement. For joint operations, a company recognizes its share  of assets, liabilities, revenues and expenses of the joint operation. An investment in a joint venture  is accounted for using the equity method as set out in IAS 28, “Investments in Associates and Joint  Ventures” (amended in 2011). IAS 19 (Revised 2011) amends certain accounting requirements for defined benefit pension plans  and termination benefits. IAS 19 (Revised 2011) requires the net defined benefit liability (asset) to be  recognized on the Statement of Financial Position without any deferral of actuarial gains and losses  and past service costs as previously allowed. Past service costs are recognized in net income when  incurred. Expected returns on plan assets are no longer included in post-employment benefits’ expense. Instead, post-employment benefits’ expense includes the net interest on the net defined benefit liability  (asset) calculated using a discount rate based on market yields on high quality bonds. Remeasurements  consisting of actuarial gains and losses, the actual return on plan assets (excluding the net interest 