Notes to consolidated financial statements  September 27, 2014 and September 28, 2013 (Millions of dollars, unless otherwise indicated) 1. DESCRIPTION OF BUSINESS 2. SIGNIFICANT ACCOUNTING POLICIES Consolidation Sales recognition Recognition of consideration from vendors Loyalty programs Foreign currency translation - 47 - The consolidated financial statements are presented in Canadian dollars, the Corporation's functional currency .  T ransactions  in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the  transaction.  At  each closing, monetary items denominated in foreign currency are translated using the exchange rate  at  the closing date. Non-monetary items that are measured at historical cost in foreign currency are translated using the  exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in foreign currency  are translated using the exchange rate at the date when the fair value was determined. Gains or losses resulting from  currency  translations  are  recognized  in net  earnings. The  second program belongs to the Corporation. At the time of a sale to the customer, part of it is recorded in accounts  payable  as deferred revenue equal to the fair value of the program's issued points, as determined based on the exchange  value  of the points awarded and the expected redemption rate which are regularly remeasured, and recognized as sales  when the  points are redeemed. The first program, for which the Corporation acts as an agent, belongs to a third party and its cost is recorded as a  reduction  in  sales  at the time of sale to the  customer . The  Corporation  has  two loyalty programs. In some cases, a cash consideration from vendors is considered as an adjustment to the vendor's product pricing and  is therefore characterized as a reduction of cost of sales and related inventories when recognized in the consolidated  financial statements. Certain exceptions apply if the cash consideration constitutes the reimbursement of incremental  costs incurred by the Corporation to promote the vendor's products or a payment for assets or services delivered to  vendors.  This other consideration from vendors is accounted for, according to its nature, under sales or as a reduction  of  the cost of sales and  operating expenses when  receipt  is  considered likely  and can  be reasonably  estimated. Sales come essentially from the sale of goods. Retail sales made by corporate stores and stores that are structured  entities  are recognized at the time of sale to the customer, and sales to affiliated  stores  and other customers when the  goods  are delivered. The rebates granted by the Corporation  to  its retailers are recorded  as  a reduction in  sales. The consolidated financial statements include the accounts of the Corporation and its subsidiaries, as well as those of  structured  entities. All intercompany  transactions  and  balances were  eliminated  on  consolidation. The consolidated financial statements, in Canadian dollars, have been prepared by management in accordance with  International  Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).  The  consolidated financial statements have been prepared within the reasonable limits of materiality, on a historical cost  basis,  except for certain financial instruments measured at fair value. The significant accounting policies are summarized  below: METRO  INC. (the Corporation) is a company incorporated under the laws of Québec. The Corporation is one of Canada’s  leading  food retailers and distributors and operates a network of supermarkets, discount stores and drugstores. Its head  of fice is located at 1 1011 Maurice-Duplessis Blvd., Montréal, Québec, Canada, H1C 1V6. Its various components  constitute  a single operating  segment.