DIVERSIFIED ROYALTY CORP .  Notes toConsolidatedFinancial Statements  (Unaudited)  (Expressed in Canadian dollars)  Year ended December 31, 2014  6. Deferred income taxes (continued):  Income tax expense as reported differs from the amount that would be computed by applying the  combined Federal and Provincial statutory income tax rates to the profit before taxes. The reason  for the difference is as follows: 2014  2013  Loss before taxes $ (2,356,974)  $ (3,681,962)  Combined Canadian federal and provincial rates 26.00%  26.55%  Expected tax recovery (612,813)  (977,405)  Increased (reduced) by:  Permanent and other non-deductible differences 83,708  112,226  Change in unrecognized deferred tax assets (9,250,107)  -  Change in unrecognized temporary and other differences  -  865,179  Changes in prior year estimates -  (95,500)  Total tax expense per the statement of  operations and comprehensive loss $ (9,779,212)  $  (95,500)  The tax effect of temporary  differences that gives rise to the net deferred tax asset are as follows: 2014  2013  Deferred tax asset: Non-capital losses  $  9,455,525  $  -  Financing costs  439,068  -  Accounts payable and accrued liabilities 431,395  -  Intangible assets  222,555  -  Investment tax credits 229,395  -  Gross deferred tax asset 10,777,938  -  Deferred tax liability: FranworksRights  (449,889)  -  Net deferred tax asset $ 10,328,049  $  -  17 