As at and for the fifty-two weeks ended January 1, 2011 the Company recognized: 

1. A decrease to bank loans of $0.04 million; 

2. A net deferred income tax liability of $0.01 million; and 

3. A decrease to short-term interest expense (finance costs) $0.04 million with an increase in deferred taxes of $0.01 million. 

With respect to reversal of an impairment of a financial asset, IAS 39 indicates that if, in a subsequent period, we expect to, or begin to use more of the Company’s facility, we would reverse the impairment taken if the decrease in the applicable impairment previously taken can be related objectively to an event occurring after the impairment was recognized (such as additional drawings on the Company’s credit facility), and the previously recognized impairment loss would be reversed either directly in income or by adjusting an allowance account. The reversal should be made such that the carrying amount of the financial asset does not exceed what the amortized cost would have been had the impairment not been recognized at the date the impairment is reversed. The Company has not identified the need to reverse impairments taken as at this time. 

## (vii) Impairment of a non-financial asset 

As described in note 26 (d) (i), the Company completed an impairment review of its assets both at its IFRS transition date, January 3, 2010 and for the fiscal year ended January 1, 2011 and concluded in both instances that no impairment losses in respect of the Company’s cash-generating units should be recognized throughout 2010 nor has the Company identified any indicators of impairment subsequently throughout 2011. The Company assesses impairment for its indefinite lived intangible assets and goodwill by comparing the recoverable amount for each of its cash-generating units with its carrying value. The Company traditionally performs its annual test for impairment of its cash-generating units in the fourth quarter in accordance with the policy described in note 3 (b). 

The Company has determined that all prior period impairments recognized under Canadian GAAP with respect to its brand intangible assets are to be derecognized as a result of transitioning to IFRS. The method used to test if any impairment should be recognized for indefinite lived brand assets under Canadian GAAP is not IFRS-compliant. IFRS requires that indefinite lived intangible assets like the Company’s brands are tested as part of the Company’s test for impairment of its CGUs. As a result, on transition to IFRS, the Company derecognized previous impairments recognized under Canadian GAAP because there was no indication of impairment resulting from the IFRS-compliant transition date impairment test of the Company’s CGUs. 

As a result, the Company made the following adjustments to record the reversal of the impairment of indefinite lived intangible asset as at the transition date: 

1. An increase in indefinite lived intangible brand assets of $0.18 million; 

2. A net deferred income tax asset of $0.06 million; and 

3. A reduction to opening retained earnings of $0.12 million. 

The transition adjustment above had no impact on subsequent reporting periods. 

Changes in the Company’s accounting policies on transition from Canadian GAAP to IFRS with respect to the recognition of an impairment of a non-financial asset are as follows: 

## deteRmination ofthe ReCoveRable amount 

Canadian GAAP – A recoverability test is performed by first comparing the undiscounted expected future cash flows to be derived from the asset to its carrying amount. If the asset does not recover its carrying value, an impairment loss is calculated as the excess of the asset’s carrying amount over its fair value. 

IFRS – The impairment loss is calculated as the excess of the asset’s carrying amount over its recoverable amount, where recoverable amount is defined as the higher of the asset’s fair value less costs to sell and its value-in-use. Under the value-in-use calculation, the expected future cash flows from the asset are discounted to their net present value. As a result of the change in measurement methodology, the Company may determine and be required to recognize impairments under IFRS that were not applicable under Canadian GAAP as a result of the change in the calculation under IFRS as noted above. 

## ReCognition ofan impaiRment 

Canadian GAAP – If indication of impairment is identified, the asset’s carrying value is compared to the asset’s undiscounted cash flows. If the undiscounted cash flows are less than the carrying value, the asset is impaired by an amount equal to the difference between the discounted cash flows and the carrying value. 

IFRS – If indication of impairment is identified, the asset’s carrying value is compared to the asset’s discounted cash flows. If the discounted cash flows are less than the carrying value, the asset is impaired by an amount equal to the difference between the discounted cash flows and the carrying value. 

