3. Significant accounting policies(continued): 

(k) Income tax (continued): 

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxa tion purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and  differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enactedor substantivelyenacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legallyenforceableright to offset current tax liabilities and assets, and they relate to income taxes levied bysame tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their  tax assets and liabilities will be realized simultaneously. 

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviews at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. 

(l) Financial instruments: 

Financial assets and liabilities are offset and the net amount is reported in the statement of financial positionwhen there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realized the asset and settle the liability simultaneously. 

At initial recognition, the Company classifies its financial instruments in the following categories depending on the purposes for which the instruments were acquired: 

 Loans and receivables: Loans and receivable are non -derivative financial asset s with fixed or determinable payments that are not quoted in an active market. Cash and cash equivalents, royalties receivableand amounts receivable, are included in this category. 

Loans and receivables are initially recognized at the amount expected to be received less, when material, a discount to reduce the loans and receivables to fair value. 

Subsequently, loans and receivables are measured at amortized cost using the effective interest method. 

