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)
69
In June 2014, the FASB issued ASU No. 2014-10, which amended Accounting Standards Codification (ASC) Topic
915 Development Stage Entities. The amendment eliminates certain financial reporting requirements surrounding
development stage entities, including an amendment to the variable interest entities guidance in ASC Topic 810,
Consolidation. The amendment removes the definition of a development stage entity from the ASC, thereby
removing the financial reporting distinction between development stage entities and other entities from U.S. GAAP.
Consequently, the amendment eliminates the requirements for development stage entities to (1) present inception-to-
date information in the statements of income, cash flows and shareholder equity, (2) label the financial statements as
those of a development stage entity, (3) disclose a description of the development stage activities in which the entity
is engaged, and (4) disclose the first year in which the entity is no longer a development stage entity. This
amendment is effective for fiscal years beginning after December 15, 2014, and interim periods therein. Early
application of each of the amendments is permitted for any annual reporting period or interim period for which the
entity’s financial statements have not yet been issued. The Company has made the election to early adopt this
amendment effective December 31, 2014 and, as a result, the Company is no longer presenting or disclosing the
information previously required under Topic 915. The early adoption was made to reduce data maintenance by
removing all incremental financial reporting requirements for development stage entities. The adoption of this
amendment alters the disclosure requirements of the Company, but it does not have any material impact on the
Company’s financial position or results of operations for the current or any prior reporting periods.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting
period. Actual results could differ from those estimates. The amounts which involve significant estimates include
asset retirement obligations, stock-based compensation, derivative liabilities, and impairments.
Cash and cash equivalents
Cash and cash equivalents consist of cash and liquid investments with an original maturity of three months or less.
At December 31, 2014 and 2013, cash and cash equivalents consisted of $10,139 and $23,902, respectively, of funds
held in bank accounts with financial institutions in both Canada and the U.S.
Short-term investments
Short-term investments generally represent investments in guaranteed interest contracts and time deposits which
have original maturities in excess of three months but less than twelve months. These investments are accounted for
at amortized cost.
Marketable securities
Marketable securities include our investments in shares of publicly traded companies. These investments have been
categorized as available-for-sale financial instruments and are carried at fair value. Adjustments to fair value are
recorded in other comprehensive income/(loss) unless there is a sustained loss in value that is deemed to be other-
than-temporary, in which case the adjustment to fair value is included in income and not reversed on future fair
value changes.
