NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. CORPORATE INFORMATION NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Contents Basis of Preparation Statement of compliance Basis of measurement 2013 ANNUAL REPORT  57 Capstone is incorporated and domiciled in Canada and principally located at 155 Wellington Street West, Suite 2930, Toronto, Ontario, M5V 3H1. The mission of Capstone Infrastructure Corporation and its subsidiaries (together the “Corporation” or “Capstone”) is to provide investors with an  attractive total return from responsibly managed long-term investments in core infrastructure in Canada and internationally. Capstone’s portfolio comprises investments in Canada’s power infrastructure, including gas cogeneration, wind, hydro, biomass and solar power generating facilities, representing approximately net 439 MW of installed capacity, and contracted wind power development projects totaling an expected net79 MW of  capacity. Capstone also invests in utilities, including a 33.3% interest in a district heating business in Sweden, and a 50% interest in a regulated water utility in the United Kingdom. All amounts are in Canadian thousands of dollars or thousands of share amounts unless otherwise indicated. The following significant accounting policies are used in the preparation of these consolidated financial statements. The consolidated financial statements have been prepared under the historical cost basis, except for the revaluation of certain financial instruments, which are measured at fair value as explained in the accounting policies set out below and on a going concern basis of accounting (see note 9). Historical cost is generally based on the fair value of the consideration given in exchange for assets. The consolidated financial statements of Capstone have been prepared in accordance with International Financial Reporting Standards ("IFRS"). The consolidated financial statements were authorized for issue by the Board of Directors on March 6, 2014. Corporate Information  57 Summary of Signifi cant   Accounting  Policies  57 Acquisition and Disposition  68 Cash and Cash Equivalents  and Restricted Cash  69 Short-Term Deposits  69 Trade and Other Receivables  69 Other Assets  70 Loans Receivable  71 Financial Instruments  71 Financial Risk Management  74 Equity Accounted Investments  78 Capital Assets  79 Projects Under Development  80 Intangibles 80 Retirement Benefi t Plans  81 Income Taxes  84 Accounts Payable and   Other  Liabilities  85 Finance Lease Obligations  85 Long-Term Debt  86 Liability for Asset Retirement Obligation 91 Shareholders’ Equity  92 Non-controlling Interests  94 Earnings Per Share (“EPS”)  95 Share-based Compensation 96 Expenses – Analysis by Nature  97 Other Gains and Losses  97 Commitments and Contingencies  98 Related Party Transactions  99 Segmented Information  100 Non-cash Working Capital  100 Comparative Figures  100