2005 Annual Report – "Thriving" - Royal Canadian Mint

Notes to consolidated financial statements
December 31, 2005
1. Authority and objectives
The Mint was incorporated in 1969 by the Royal Canadian Mint Act to mint coins in anticipation of profit and carry out
other related duties. The Mint is an agent Corporation of Her Majesty named in Part II of Schedule III to the Financial
Administration Act. It produces all of the circulation coins used in Canada and manages the support distribution system
for the Government of Canada. The Mint is one of the world’s foremost producers of circulation, collector and bullion
investment coins for the domestic and international marketplace. It is also one of the largest gold refiners in the world.
In 2002, the Mint incorporated RCMH-MRCF Inc., a wholly-owned subsidiary, to hold the Mint’s interest (50%) in TGM
Speciality Services Inc., a joint venture with a private sector partner. TGM Specialty Services Inc.’s objective is to offer packaging
products and services to domestic and international markets.
2. Summary of significant accounting policies
These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting
principles. The significant accounting policies of the Corporation are:
a) Consolidation
The consolidated financial statements include the accounts of the Corporation and its wholly-owned subsidiary. Its interest
in the joint venture is proportionately consolidated.
b) Cash and cash equivalents
Cash includes cash equivalents, that are investments that are held to maturity and have terms to maturity of three months or
less at the time of acquisition. Cash equivalents consist primarily of commercial paper. Cash and cash equivalents are carried
at cost, which approximates their fair value.
c) Short-term investments
Short-term investments consist of investments in money market instruments with terms to maturity of 12 months or less.
These investments are carried at cost, which approximates their fair value.
d) Inventories
Raw materials and supplies are valued at the lower of cost and replacement cost, cost being determined by the average cost
method. Work in process and finished goods are valued at the lower of cost and net realizable value, cost being determined
by the average cost method.
e) Property, plant and equipment
Property, plant and equipment are recorded at cost and depreciated under the straight-line method at the following annual rates:
Land improvements 2.5%
Buildings 2.5%
Equipment 10%
Hardware and software 20%
Amounts included in uncompleted capital projects are transferred to the appropriate property, plant and equipment
classification upon completion, and are then amortized.
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