Financial Statements of - Shoppers Drug Mart

SHOPPERS DRUG MART CORPORATION
Notes to the Consolidated Financial Statements
(unaudited)
(in thousands of Canadian dollars, except per share data)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
An impairment loss in respect of goodwill is not reversed. With respect to other assets, impairment
losses recognized in prior periods are assessed at each reporting date for any indicators that the loss
has decreased or no longer exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the
extent that the carrying amount of the asset does not exceed the carrying amount that would have
been determined, net of depreciation or amortization, if no impairment loss had been recognized.
(q) Bank Indebtedness
Bank indebtedness is comprised of corporate bank overdraft balances, corporate and Associate-owned
store bank lines of credit and outstanding cheques.
(r) Retirement Benefit Obligations
(i)
Defined Benefit Plans
The Company maintains registered defined benefit pension plans under which benefits are available
to certain employee groups. The Company also makes supplementary retirement benefits available to
certain employees under a non-registered defined benefit pension plan.
The Company accrues for its defined benefit plans under the following policies:
The cost of pensions and other retirement benefits earned by employees is actuarially determined
using the projected benefit method pro-rated on service and management’s best estimate of
expected plan investment performance, salary escalation, retirement ages of employees and their
expected future longevity.
For the purposes of calculating the expected return on plan assets, those assets are valued at fair
value.
The Company recognizes actuarial gains and losses in other comprehensive income (loss) in the
period in which those gains and losses occur.
The pension plans are funded through contributions based on actuarial cost methods as permitted by
applicable pension regulatory bodies. Benefits under these plans are based on the employees’ years
of service and final average earnings.
(ii)
Defined Contribution Plans
The Company maintains a defined contribution plan for a small number of employees. Required
contributions are recognized as an expense when the employees have rendered service.
(iii)
Other Long-term Employee Post-retirement Benefit Plans
The Company maintains post-retirement benefit plans, other than pensions, covering benefits such as
health and life insurance for certain retirees. The cost of these plans is charged to earnings as benefits
are earned by employees on the basis of service rendered.
38