notes to the Consolidated Financial Statements (cont’d) (c) functional and preSentation currency (d) period end dateS (e) uSe of eStimateS and critical judgmentS Impairment of non-financial assets Share-based payments Employee future benefits 57 AnnuAl RepoRt 2011 The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest  rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension liability.  Estimating fair value requires determining the most appropriate valuation model, which is dependent on the terms and conditions of  the grant. This also requires determining the most appropriate inputs to the valuation model including assumptions on the expected  life of the option, volatility and dividend yield and making assumptions about them. The assumptions and models used are disclosed  in  note 18. The Company measures the cost of cash-settled transactions with employees initially at fair value at the grant date; the liability is  re-measured at each balance sheet date with changes in fair value recognized in profit or loss. When calculations to determine the recoverable amount of the CGU are undertaken, management must estimate the expected future  cash flows from the individual asset or CGU and choose a suitable discount rate in order to calculate the present value of those cash  flows. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company  is not yet committed to or significant future investments that will enhance the asset’s performance of the cash-generating unit being  tested. Further details, including a sensitivity analysis of key assumptions, are given in  note 5  and  note 26 (c)(i). At each balance sheet date, the Company reviews the carrying amounts of its property, plant and equipment and intangible assets to  determine whether there is any indication that those assets have suffered an impairment loss. Individual assets are grouped together  as a cash-generating unit (“CGU”) for impairment assessment purposes at the lowest level at which there are identifiable cash flows  that are independent from other Company assets. The Company’s CGUs, including a goodwill balance, are tested for impairment  annually and at other times when indicators of impairment arise. The manner in which the Company identified its CGUs is disclosed  in  note 5  and  note 26 (c)(i) .  The most significant estimates made by management include the following: The most significant critical judgment made by management in applying the Company’s accounting policies that could impact the  amounts recognized in the consolidated financial statements is in relation to management’s assessment of arrangements containing  a lease and lease classification. The preparation of the Company’s financial statements requires management to make critical judgments, estimates and assumptions  that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the  reporting date. On an ongoing basis, management evaluates its judgments, estimates and assumptions using historical experience  and various other factors it believes to be reasonable under the given circumstances. Actual outcomes may differ from these  estimates under different assumptions and conditions that could require a material adjustment to the reported carrying amounts in  the future.  The Company’s fiscal year end is on the Saturday closest to December 31. This results in a fifty-three week fiscal year every five to  seven years. Both the 2011 and the 2010 fiscal years are fifty-two week years. The Company’s financial reporting periods each consist  of thirteen weeks with the exception of the fourth quarter in a fifty-three week year, which consists of fourteen weeks.  Unless otherwise noted, all amounts in these consolidated financial statements are in Canadian dollars, which is the Company’s  presentation currency. Each of the Company’s subsidiaries and its joint venture determines its own functional currency. The Company  conducts its business in Canadian and US dollars. The average US to Canadian dollar exchange rate throughout the fifty-two week  period ended December 31, 2011 was 0.9891 (January 1, 2011: 1.0300). The December 31, 2011 period end exchange rate was 1.017, the  January 1, 2011 year end exchange rate was 0.9946 and the transition date exchange rate was 1.0466. All financial information  presented in Canadian dollars has been rounded to the nearest thousand. • the defined benefit employee future benefit asset is recognized as the net total of the plan assets, plus unrecognized past service  costs and the present value of the defined benefit obligation. • production equipment is measured at its fair value as at the Company’s Transition Date; and • liabilities for cash-settled share-based payment arrangements are measured at fair value; 