3/ Capital assets (continued) RECO has commitments under the terms of a capital lease for office equipment. The following is a schedule of future minimum lease payments under the capital lease expiring December 1, 2020, together with the balance of the obligation under the capital lease, which is included in accounts payable and accrued liabilities: $ 2018 19,246 2019 19,246 2020 14,435 52,927 Less amount representing interest at 9% 6,489 46,438 4/ Intangible assets 2017 Cost Accumulated amortization Net book value $ $ $ Management information system 2,479,306 83,677 2,395,629 Computer software 1,444,155 1,267,787 176,368 3,923,461 1,351,464 2,571,997 2016 Cost Accumulated amortization Net book value $ $ $ Management information system 2,479,306 - 2,479,306 Computer software 1,389,352 1,100,217 289,135 3,868,658 1,100,217 2,768,441 5/ Administrative agreement An administrative agreement exists between RECO and the Ministry of Consumer Services (the “Agreement”). Amounts payable under the Agreement are recognized in the year incurred. In the current year, $198,707 (2016: $194,957) was incurred as an expense. Amounts for future years will be as determined by the Ministry of Consumer Services. 6/ Deferred lease inducement The deferred lease inducement represents the reimbursement by the lessor of certain expenditures for leasehold improvements made by RECO and graduated rental increases as inducements to enter into a long-term lease. These inducements are amortized on a straight-line basis as a reduction of rental expense over the term of the lease. $ Balance, December 31, 2016 500,157 Amortized to rental expense 2017 95,268 Balance, December 31, 2017 404,889 Amounts to be amortized in 2018 95,268 Amounts to be amortized in 2019 and subsequent years 309,621 404,889 7/ Deferred revenue A/ OPERATIONS FUND Deferred revenue represents registration fees received that relate to subsequent periods. The movements in the deferred revenue balance during the year were: $ Balance, December 31, 2016 14,655,823 Registration fees received in 2017 16,384,231 Less amounts recognized as revenue in 2017 14,578,586 Balance, December 31, 2017 16,461,468 Amounts to be recognized as revenue in 2018 12,010,365 Amounts to be recognized as revenue in 2019 4,451,103 16,461,468 INDEPENDENT AUDITORS' REPORT/RECO 2017 ANNUAL REPORT /59