Summary of significant accounting policies FOR THE YEARS ENDED JANUARY 31, 2004 AND 2003 page 89 Bombardier Inc. Annual Report 2003-04 Nature of operations and consolidated financial statement presentation Bombardier Inc. consolidated Bombardier BC Bombardier Inc. consolidated – Significant accounting policies Basis of consolidation Most legal entities of the transportation segment use a December-31 fiscal year end. As a result, the Corporation consolidates these operations with a one-month lag with the remainder of its operations. To the extent that significant and/or unusual transactions or events occur during the one-month lag period, they are accounted for within the Corporation’s Consolidated Financial Statements. Bombardier Inc. (the “Corporation”) is incorporated under the laws of Canada. Bombardier Inc., a diversified manufacturing and services company, is a manufacturer of transportation equipment, including regional and business aircraft and rail transportation equipment. It also provides financial services and asset management in business areas aligned with its core expertise. Bombardier Inc. and its subsidiaries carry out their operations in three distinct segments, each one characterized by a specific operating cycle; therefore, the consolidated balance sheets are unclassified. Financial services and real estate activities, being distinct from Bombardier’s other activities, are shown in a separate column, Bombardier Capital (BC), in the Consolidated Financial Statements. The following describes the columns shown in these financial statements. This column represents all of the activities of the Corporation on a consolidated basis, after the elimination of balances and transactions between Bombardier and BC. This column represents the activities of the Corporation’s two manufacturing segments (aerospace and transportation). Related party transactions and balances between these segments have been eliminated, whereas related party transactions and balances between Bombardier and BC have not been eliminated. Bombardier’s investment in BC is accounted for under the equity method and comprises BC’s equity and the subordinated debt of Bombardier in BC. This column represents the financial services and real estate activities of the Corporation. Related party transactions and balances within BC have been eliminated, whereas related party transactions and balances between BC and Bombardier have not been eliminated. The Consolidated Financial Statements include the accounts of Bombardier Inc. and its subsidiaries, substantially all of which are wholly owned. They also include the Corporation’s proportionate share of its joint ventures. The principal subsidiaries of the Corporation included in the Consolidated Financial Statements are as follows: SUBSIDIARY LOCATION Aerospace segment Learjet Inc. United States Short Brothers PLC United Kingdom Transportation segment Bombardier Transportation GmbH Germany Bombardier Transportation UK Ltd. United Kingdom Bombardier Transit Corporation United States Bombardier Transportation (Bahntechnologie) Germany GmbH & Co. KG Germany BC segment Bombardier Capital Inc. United States Bombardier Capital Ltd. Canada