DIVERSIFIED ROYALTY CORP .  Notes toConsolidatedFinancial Statements  (Unaudited)  (Expressed in Canadian dollars)  Year ended December 31, 2014  Intangible assets consisting of theFW Rights are recorded at their historical cost. The  intangible assets are adjusted to record the contribution of additional restaurants to the Royalty  Pool as described in note 4. The FW Rightsare not amortized as they have an indefinite life. The amount of cash available to be distributed to  DIV shareholders is determined with  reference to the Company’s periodic cash flows from operatingactivities as reported in the  consolidated financial statements less interest and fin ancing fees paid on the term loan .  Distributions to the Company’s shareholders are made monthly based upon available cash. Distributions are recorded when declared and ar e subject to the Company retaining such  reasonable working capital reserves as may be considered appropriate by the Company. The Company presents basic and diluted earnings per share (“EPS”) data for its common  shares. Basic EPS iscalculated by dividing thecomprehensive incomeattributable to common  shareholders of the Company by the weighted average number of common shares outstanding  during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the  profit or loss attributable to common shareholders and the weighted average number of  common shares outstanding, adjusted for own shares held, for the effects of all dilutive potential  common shares, which comprise share options and restricted stock units gra nted to  employees.  Borrowings are initially recognized at fair value net of any financing fees, and subsequently at  amortized cost with any difference between the proceeds (net of financing fees) and the  redemption value recognized in thecomprehensive income over the period of the borrowing  using the effective interest rate method. Borrowings are classified as current liabilities unless  the Company has an unconditional right to defer settlement of the liability for more than twelve  months.  3. Significant accounting policies (continued):  (d) Intangible assets:  (e) Distributionsto DIV shareholders:  (f) Earnings per share:  (g) Borrowings:  8 