(b) Basis of Measurement
The unaudited interim financial statements have been prepared on a going concern basis under the historical cost convention except for the following items which are measured at fair value:
-- Financial instruments at fair value through profit and loss; and-- Liabilities for cash-settled share-based payment plans.
(c) Functional and Presentation Currency
These unaudited interim financial statements are presented in Canadian dollars ("$" or "C$"), the Company's functional currency. All financial information is presented in thousands, except per share amounts, which are presented in whole dollars, and number of shares, which are presented as whole numbers.
(d) Seasonality of Interim Operations
Due to the seasonal nature of the retail business and the Company's product lines, the results of operation for any interim period are not necessarily indicative of the results of operation to be expected for the fiscal year. Generally, a significant portion of the Company's sales and earnings are typically generated during the second fiscal quarter, which includes the holiday selling season. Sales are usually lowest and losses are typically experienced during the period from April to September.
(e) Estimates, Judgments and Assumptions
The preparation of these unaudited interim financial statements in accordance with IFRS requires management to make certain estimates, judgments and assumptions in applying the Company's accounting policies which have an effect on the reported amounts and disclosures made in these unaudited interim financial statements and accompanying notes. These estimates, judgments and assumptions are based on historical experience, knowledge of current events and conditions, expectations of the future and other relevant factors that are believed to be reasonable under the circumstances. Estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Significant estimates, judgments and assumptions applicable to the preparation of these unaudited interim financial statements are described in the Company's 2012 Financial Statements for the year ended June 30, 2012. Estimates made by management depend upon subjective or complex judgments about matters that may be uncertain, and changes in those estimates could materially impact these unaudited interim financial statements. Illiquid credit markets, volatile equity, foreign currency, and energy markets and declines in consumer spending have combined to increase the uncertainty inherent in estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from the estimates, judgments and assumptions made by management.
(f) Future Changes in Accounting Policies
A number of new standards, and amendments to standards and interpretations, are not yet effective for the 13-week and 26-week periods ended December 29, 2012 and have not been applied in preparing these unaudited interim financial statements. New standards and amendments to standards and interpretations that are currently under review include:
IFRS 7 - Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities ("IFRS 7")
The IASB has issued amendments to IFRS 7 relating to enhanced disclosure requirements for the offsetting of financial assets and liabilities and additional disclosures on transition from IAS 39 to IFRS 9 (as discussed below). The amendment relating to the offsetting of financial assets and liabilities is effective for annual periods beginning on or after January 1, 2013 and the amendment relating to additional disclosures on transition from IAS 39 to IFRS 9 is effective for annual periods beginning on or after January 1, 2015.