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)  (a) Principles of consolidation and deconsolidation (Continued)  (b) Foreign currency translation  (c)  Use of estimates and judgment  (d) Cash and cash equivalents  (e)  Exploration and evaluation assets (“E&E”)  When the Company ceases to control a subsidiary, assets, liabilities and non-controlling interests of the subsidiary  are derecognized at their carrying amounts at the date when control is lost. Investment retained in the former  subsidiary is recognized at its fair value and any gain or loss resulting from the deconsolidation is recorded in the  statement of income.  The Company’s functional and presentation currency is the Canadian dollar. Amounts recorded in foreign currency  are translated into Canadian dollars as follows: Gains and losses arising from this translation of foreign currency are included in the determination of net loss for the  year. The preparation of financial statements requires management to make judgments, estimates and assumptions that  affect the application of policies and reported amounts of assets and liabilities and revenue and expenses. The  estimates and associated assumptions are based on historical experience and various other factors that are believed  to be reasonable under the circumstances, the results of which form the basis of making the judgments about  carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ  from these estimates.  The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are  recognized in the period in which the estimate is revised if the revision affects only that period or in the period of  the revision and further periods if the review affects both current and future periods.  Significant areas requiring the use of estimates include the fair values of financial instruments; collectability of  receivables; the balances of accrued liabilities; impairment of exploration and evaluation assets; determination of  deferred tax assets; and the assumptions used in the determination of the fair value of share-based payments, agent  compensation options and finder’s warrants. While management believes that these estimates are reasonable, actual  results could differ from those estimates and could impact future results of operations and cash flows. Cash and cash equivalents include bank deposits and cashable highly-liquid investments that are readily convertible  to known amounts of cash and have maturities of three months or less from the date acquired. Once the legal right to explore a property has been acquired, costs directly related to E&E expenditures are  recognized and capitalized, in addition to the acquisition costs, net of recoveries, on a property-by-property basis. These direct expenditures include such costs as materials used, surveying costs, drilling costs and payments made to  contractors during the exploration phase. Costs not directly attributable to E&E activities, including general  administrative overhead costs, are expensed in the period in which they occur. - 8 -  i. Monetary assets and liabilities, at the rate of exchange in effect as at the statement of financial position  date; ii. Non-monetary assets and liabilities, at the exchange rates prevailing at the time of the acquisition of the  assets or assumption of the liabilities; and iii. Income and expenses (excluding amortization, which is translated at the same rate as the related asset), at  the rate of exchange on the transaction date.