Notes to consolidated financial statements  September 27, 2014 and September 28, 2013 (Millions of dollars, unless otherwise indicated) Income taxes Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered  from  or paid to the taxation authorities. The tax rates and tax laws used to determine these amounts are those that are  enacted or  substantively  enacted by  tax authorities by the closing  date. The  Corporation follows the liability method of accounting for income taxes. Under this method, deferred tax assets and  liabilities are accounted for based on estimated taxes recoverable or payable that would result from the recovery or  settlement of the carrying amount of assets and liabilities. Deferred tax assets and liabilities are measured u sing  substantively  enacted tax rates expected to be in effect when the temporary differences are expected to reverse. Changes  in  these amounts are included in current net earnings in the period in which they occur. The carrying amount of deferred  tax  assets is reviewed at every closing date and reduced to the extent that it is no longer probable that sufficient earnings  will be  available  to  allow  all or  part of the  deferred  tax assets  to  be  utilized. A  share-based compensation expense is recognized for the stock option and performance share unit (PSU) plans offered  to  certain employees. Income  tax relating  to  items recognized  directly  in equity  is  recognized  in  equity. Share-based payment Stock option awards vest gradually over the vesting term and each tranche is considered as a separate award. The  value  of the remuneration expense is calculated based on the fair value of the stock options at the option grant date and  using the Black-Scholes valuation model. The compensation expense is recognized over the vesting term of each  tranche. The compensation expense for the PSU plan is determined based on the market value of the Corporation's Common  Shares  at grant date. Compensation expense is recognized on a straight-line basis over the vesting period. The impact  of any changes in the number of PSUs is recorded in the period where the estimate is revised. The grant qualifies as  an  equity  instrument. Basic net earnings per share are calculated by dividing the net earnings attributable to equity holders of the parent by  the weighted average number of Common Shares outstanding during the year .  For the fully diluted net earnings per  share,  the net earnings attributable to equity holders of the parent and the weighted average number of Common Shares  outstanding are  adjusted to reflect all potential  dilutive shares. Cash and cash equivalents consist of cash on hand, bank balances, highly liquid investments (with an initial term of  three  months or less), outstanding deposits and cheques in transit. They are classified as “Financial assets at fair value  through  net earnings” and measured at fair value, with revaluation at the end of each period. Resulting gains or losses  are  recorded in  net  earnings. Accounts  receivable and loans to certain customers are classified as “Loans and receivables”. After their initial fair value  measurement, they are measured at amortized cost using the ef fective interest method. For the Corporation, the  measured  amount generally  corresponds to  cost. Net earnings per share Cash and cash equivalents Accounts receivable Inventories Inventories are valued at the lower of cost and net realizable value. W arehouse  inventories cost is determined by the  average  cost method net of certain considerations received from  vendors. Retail inventories cost is valued at the retail  price  less the gross margin and certain considerations received from vendors. All costs incurred in bringing the inventories  to  their present location  and  condition  are  included in  the  cost of warehouse  and retail inventories. - 48 -