Financial Statements of - Shoppers Drug Mart

SHOPPERS DRUG MART CORPORATION
Notes to the Condensed Consolidated Financial Statements
(unaudited)
(in thousands of Canadian dollars, except per share data)
12. EXPLANATION OF TRANSITION TO IFRS (continued)
The following is the impact of adopting IFRS 3 on the Company’s financial position as at January
1, 2011 and June 19, 2010, as a result of restating the purchase price allocations of business
acquisitions as at the acquisition date when purchase price adjustments were recorded in
subsequent reporting periods under previous GAAP:
As at
Balance sheet impact
Accounts receivable $
January 1,
2011
- $
June 19,
2010
(155)
Prepaid expenses and deposits - -
Goodwill (38) (320)
Intangible assets - 525
Accounts payable and accrued liabilities - -
Other long-term liabilities - 50
Deferred tax liabilities 11 -
Decrease in retained earnings $ (27) $ -
There were no increases in provisions as at January 1, 2011 and June 19, 2010, to reflect assumed
contingent liabilities at fair value at the date of acquisition.
As a condition to making the election under IFRS 1, goodwill relating to business combinations
that occurred prior to January 3, 2010 must be tested for impairment, even though no impairment
indicators were identified. At the date of transition, the Company performed an impairment test
on goodwill and no impairment was identified.
viii)
Deferred Tax Assets and Deferred Tax Liabilities
Under previous GAAP, the Company recognized a deferred (future income) tax asset on the
temporary difference between the cost base and the tax base of inventory. This temporary
difference related primarily to consideration received from vendors which is classified as a
reduction to the cost of inventory on consolidation. Under IFRS, this adjustment is not
considered a temporary difference and, as such, there is no deferred tax asset.
Under previous GAAP, deferred tax assets and liabilities were presented as current or long-term
on the consolidated balance sheets in accordance with the assets or liabilities that gave rise to the
deferred tax balances. Under IFRS, deferred tax assets and liabilities may not be presented as
current. The Company has reclassified the deferred taxes into non-current assets and liabilities
based on the net asset and liability positions of the entities that have generated the balances.
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