Notes to the  Consolidated Financial Statements December 31, 2003 and 2002 1 Significant Accounting Policies The Company was incorporated under the laws of Ontario to engage in the business of acquiring, expanding, developing, redeveloping and owning neighbourhood and community shopping centres. The Company’s accounting policies and its standards of financial disclosure are in accordance with Canadian generally accepted accounting principles. The Company’s significant accounting policies are as follows:  The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, trusts, and the Company’s proportionate share of assets, liabilities, revenues and expenses of partnership and limited liability corporate ventures, which are accounted for using the proportionate consolidation method. The Company’s investment in Equity One, Inc. is accounted for on the equity basis. Shopping centres are stated at cost less accumulated amortization. If it is determined that the carrying amount of a property exceeds the undiscounted estimated future net cash flows expected to be received from the ongoing use and residual worth of the property, it is reduced to its estimated fair value. In accordance with CICA 1581 and CICA 3062, effective for transactions after September 12, 2003, the purchase price of shopping centre properties is allocated to land, building, tenant improvements, and intangibles such as the value of above and below-market leases, origination costs associated with in-place leases and the value of tenant relationships, if any. (b) Shopping Centres  (a) Principles of Consolidation (c) Land and Shopping Centres Under Development (d) Property Rental Revenue Land and shopping centres under development are stated at cost. If it is determined that the carrying amount of a property exceeds the undiscounted estimated future net cash flows expected to be received from the ongoing use and residual worth of the completed property, after taking into account estimated costs to complete the development, it is reduced to its estimated fair value. Cost includes all expenditures incurred in connection with the acquisition, development, redevelopment and initial leasing of the properties. These expenditures include acquisition costs, construction costs, initial leasing costs, other direct costs, building improvement costs and carrying costs. Carrying costs (including property taxes and interest on both specific and general debt, net of operating results) are capitalized to the cost of the properties until the accounting completion date (which is based on achieving a satisfactory occupancy level within a predetermined time limit). Upon completion, the properties are classified as shopping centres. Property rental revenue includes rents earned from tenants under lease agreements, including percentage participation rents, property tax and operating cost recoveries, and incidental income, including lease cancellation payments. 52 First Capital Realty Annual Report 2003