84 1. BASIS OF PRESENTATION Corus Entertainment Inc. (“Corus” or the “Company”) is incorporated under the Canada Business Corporations Act . Its shares are listed on the Toronto and New York Stock Exchanges. The Company is a diversified Canadian communications and media broadcasting company. The consolidated financial statements have been prepared by management on the historical cost basis in accordance with accounting principles generally accepted in Canada. Until August 31, 1999, Corus had no legal status or existence as it operated as the Corus Entertainment Division (the “Division”) of Shaw Communications Inc. (“Shaw”).  Effective September 1, 1999, the shareholders of Shaw approved an arrangement (the “Arrangement”) to divide Shaw into two separate public corpora- tions, Shaw Communications Inc. and Corus Entertainment Inc. The Arrangement resulted in the transfer of the Division to Corus. Prior to the Arrangement, all of the Division’s debt and financing was provided by Shaw. The cumulative net total of this financing was, exclusive of $300,000,000 debt described in the following paragraph, represented in the Division’s accounts as Net investment by Shaw of $470,839,000 as at August 31, 1999. As part of the Arrangement, Shaw’s net investment was exchanged for 1,907,665 Class A Voting and 28,492,618 Class B Non-Voting Shares of Corus for a total of $470,839,000 (note 11). The Arrangement has been accounted for on a continuity of interests basis, whereby the Company’s share capital is based on the carrying amount of the Division’s net assets. As a consequence of the capitalization of the Company, earnings per share are only applicable for the period subsequent to August 31, 1999. Upon effecting the Arrangement, Corus drew down $300,000,000 on its own credit facility and repaid the $300,000,000 debt owing to Shaw. The allocation of $300,000,000 in debt by Shaw is reflected on the Division’s consolidated balance sheet as at August 31, 1999. Interest was allocated to the Division for fiscal 1999 NOTES TO CONSOLIDATED  FINANCIAL STATEMENTS AUGUST 31, 2000, 1999 AND 1998