The Foundation extends financial assistance to independent production companies for the production of Canadian television drama series for private sector broadcasters. The Foundation also provides financing for pilot projects and special project grants to television organizations and associations.

The Foundation is a registered charity under the Income Tax Act (Canada) and is classified as a private foundation. While registered, the Foundation may issue tax-deductible receipts to donors.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed in the preparation of these financial statements:

Investments
Investments are recorded at cost. Provision is made for declines in the value of investments which are considered to be other than temporary. The investments are comprised of fixed income securities including treasury bills, bonds, debentures and notes.

Revenue recognition
The Foundation accounts for interest using the accrual basis of accounting whereby interest income is recognized in the year in which it is earned.

As part of the financing agreements entered into with independent production companies, the Foundation may receive recoupments from completed and broadcast productions. Such recoupments, which depend on the ultimate profitability of a production, are recognized as revenue when received.

Fixed assets
Fixed assets are comprised of office furniture and equipment and are recorded at cost. Depreciation is provided on a straight-line basis over five years. No depreciation is recorded in the year of acquisition or disposal.

3. FUNDS
[a] The Foundation is comprised of a Restricted Fund and an Operating Fund. The Restricted Fund is comprised of $21,200,000 restricted in perpetuity and $8,870,000 which is restricted as follows:

Income earned on the Restricted Fund is used to fund the Foundation's grants and, consequently, is included in the Operating Fund.

The operations of the Foundation which include investment income, operating and administrative expenses and funding distributions are recorded through the Operating Fund.

[b] The Restricted Fund was increased during the year by a $174,000 restricted donation. This was the fifth and final payment under a commitment made by Maclean Hunter Limited to the Canadian Radio-television and Telecommunications Commission to donate $870,000 to the Foundation over a period of five years. In 1994, Maclean Hunter Limited was acquired by Rogers Communications Inc. ["RCI"]. RCI made the final payment under this commitment.

4. LOAN RECEIVABLE
The loan is non-interest bearing, except in the event of default, and is repayable no later than March 1, 1999. In addition to the repayment of the principal amount of the loan, a bonus, as defined in the agreement, will be payable to the Foundation for each year or portion thereof, for which the loan is outstanding.

5. COMMITMENTS
During 1996, the Foundation authorized funding for ongoing projects that were not completed. As a result, at December 31, 1996, there existed commitments to pay certain amounts as follows: