(b) Investment in MEDIchair Ltd. (“MEDIchair”):  6. Income tax expense:  40  2011 Annual Report  Alaris Royalty Corp. Year ended Dec 31 2011  2010  Earnings before income taxes $ 42,441,666 $ 10,812,335 Combined federal and provincial statutory income tax rate  26.5%  28.0%  Expected income tax provision $ 11,247,041 $ 3,027,454 Non-deductible expense  (571,013)  348,196  LP asset – fair value  (2,020,562)  -  Intangibles (625,000) - Rate changes and other  (301,244)  (35,469)  $ 7,729,222 $ 3,411,119 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:  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.  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.  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.  5. Investments (continued):  Notes to Consolidated Financial Statements  Year ended December 31, 2011 