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## 5. Investments (continued): 

## (b) Investment in MEDIchair Ltd. (“MEDIchair”): 

On September 12, 2005, the Corporation purchased certain intellectual property (the "MEDIchair IP") from MEDIchair for an aggregate purchase price of $6.5 million (the "MEDIchair Investment") pursuant to an acquisition agreement (the "MEDIchair Acquisition Agreement") dated September 12, 2005. The MEDIchair IP was subsequently licensed to MEDIchair for a term (the "Term") of 80 years pursuant to a license agreement (the "MEDIchair License Agreement") in 2005 in consideration of an annual royalty (the "Royalty"). From September 12, 2005 through June 9, 2011, the Corporation collected $6.33 million in royalties from MEDIchair. 

On June 9, 2011, the Corporation sold all of the MEDIchair intellectual property for $10,000,000, a 54% premium to its original cost. Carrying value prior to the sale included amortization of $475,318 and was $6.1 million resulting in a $3.8 million gain in the period. 

## 6. Income tax expense: 

Income tax expense is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year applied to the pre-tax income of the interim period. The Corporation’s consolidated effective tax rate for the year ended December 31, 2011 was 26.5% (year ended December 31, 2010 – 28.0%).The change in effective tax rate is in line with the Canadian government’s gradual reduction in the corporate income tax rate. 

Income tax expense is calculated by using the combined federal and provincial statutory income tax rates. The provision for income tax (deferred and current) differs from that which would be expected by applying statutory rates. A reconciliation of the difference is as follows: 

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