RARE ELEMENT RESOURCES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars, except share and per share amounts, unless otherwise noted)
71
Changes in our current and non-current asset retirement obligations are summarized in the following table:
Year ended
December 31,
Year ended
December 31,
Six months ended
December 31,
Year ended
June 30,
2014
2013
2012
2012
Balance, beginning of period
$ 415 $ 389 $ 435
$ 101
Additions
19
54
116
-
Releases
(66)
(30)
(178)
-
Revisions to cost estimates
(2)
2
16
334
Balance, end of period
$ 366 $ 415 $ 389
$ 435
Derivative instruments
From time to time, the Company may use derivative financial instruments to manage its foreign currency risks. All
derivative financial instruments are classified as current liabilities and are accounted for at trade date. Embedded
derivatives are separated from the host contract and accounted for separately if the economic characteristics and
risks of the host contract and the embedded derivative are not closely related. The Company re-measures all
derivative financial instruments as of the date of the balance sheet based on fair values derived from option pricing
models. Gains or losses arising from changes in fair value of derivatives are recognized in the Consolidated
Statements of Loss, except for derivatives that are highly effective and qualify for cash flow or net investment hedge
accounting. The Company does not have any derivatives that are highly effective and qualify for cash flow or net
investment hedging. There were no derivatives outstanding as of December 31, 2014.
Common shares
Common shares issued for non-monetary consideration are recorded at fair market value based upon the trading
price of our shares on the TSX or the NYSE MKT on the share issuance date. Common shares issued for monetary
consideration are recorded at the amount received, less issuance costs.
Foreign currency translation
Our functional currency is the U.S. dollar. All of our foreign subsidiaries are direct and integral components of the
Company and are dependent upon the economic environment of our functional currency. Therefore, the functional
currency of our foreign entities is considered to be the U.S. dollar in accordance with ASC Topic 830,
“Foreign
Currency Matters,”
and accordingly, translation gains and losses are reported in the loss for that period. Assets and
liabilities of these foreign operations are translated using period-end exchange rates and revenues and expenses are
translated using average exchange rates during each period.
Depreciation
Depreciation is based on the straight-line method. We depreciate computer equipment, furniture and fixtures and
geological equipment over a period of three years. We depreciate vehicles over a period of five years.
Stock-based compensation
The fair value of share-based compensation awards issued to employees and directors of the Company is measured
at the date of grant and amortized over the requisite service period, which is generally the vesting period. The
Company uses the Black-Scholes option valuation model to calculate the fair value of awards granted.
