44 ANNUAL REPORT 2012 419 DIVIDENDS A provision is not recorded for dividends unless the dividends have been declared by the Board of Directors on or before the end of the period and not distributed at the reporting date 420 STOCKBASED COMPENSATION The Company has stockbased compensation plans as described in Note 25 Capital Stock All transactions involving sharebased payment are recognized as an expense over the vesting period Equitysettled sharebased payment transactions such as stock option awards and the Companys longterm incentive plan are measured at the grant date fair value of employee services received in exchange for the grant of options or share awards and for nonemployee transactions at the fair value of the goods or services received at the date on which the entity recognizes the goods or services The total amount of the expense recognized in proft or loss is determined by reference to the fair value of the share awards or options granted which factors in the number of options expected to vest Equitysettled sharebased payment transactions are not remeasured once the grant date fair value has been determined except in cases where the sharebased payment is linked to nonmarket related performance conditions Cashsettled sharebased payment transactions are measured at the fair value of the liability The liability is remeasured at each consolidated balance sheet date and at the date of settlement with changes in fair value recognized in proft or loss 421 EARNINGS PER SHARE Basic earnings per share Basic earnings per share is determined by dividing proft attributable to shareholders of the Company excluding if applicable preferred dividends aftertax amortization of discounts and premiums on issuance premiums on repurchases inducements to convert relating to convertible debentures and any costs of servicing equity other than common shares by the weighted average number of common shares outstanding during the period Diluted earnings per share Diluted earnings per share adjusts the fgures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other fnancing costs associated with dilutive potential common shares and the weighted average number of shares assumed to have been issued in relation to dilutive potential common shares Potential dilutive common shares result from issuances of stock options and convertible debentures and from shares held by the trustee of the LongTerm Incentive Plan 422 FOREIGN CURRENCY TRANSLATION Functional and presentation currency Items included in the fnancial statements of each of the Companys entities are measured using the currency of the primary economic environment in which the entity operates the functional currency The consolidated fnancial statements are presented in thousands of Canadian dollars which is the Companys presentation currency Transactions Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured Foreign exchange gains and losses resulting from the settlement of such transactions and resulting from the translation at periodend exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in proft or loss except when deferred in other comprehensive income for qualifying cash fow hedges and for qualifying net investment hedges All foreign exchange gains and losses presented in proft or loss are presented within other income Changes in the fair value of monetary securities denominated in a foreign currency classifed as availableforsale are separated between translation differences resulting from changes in the amortized cost of the security and other changes in the carrying amount of the security Translation differences related to changes in amortized cost are recognized in proft or loss and other changes in the carrying amount are recognized in other comprehensive income Translation differences on nonmonetary fnancial assets and liabilities such as equities held at fair value through proft or loss are recognized in proft or loss as part of the fair value gain or loss Translation differences on nonmonetary fnancial assets such as equities classifed as availableforsale are included in other comprehensive income Translation of foreign entities Assets and liabilities are translated from the functional currency to the presentation currency at the closing rate at the end of the reporting period The consolidated statements of income are translated at exchange rates at the dates of the transactions or at the average rate if it approximates the actual rates All resulting exchange differences are recognized in other comprehensive income On disposal or partial disposal of a foreign entity or repatriation of the net investment in a foreign entity resulting in a loss of control signifcant infuence or joint control the cumulative translation account balance recognized in equity relating to that particular foreign entity is recognized in proft or loss as part of the gain or loss on sale On a partial disposition of a subsidiary that does not result in a loss of control the amounts are reallocated to the noncontrolling interest in the foreign operation based on their proportionate share of the cumulative amounts recognized in AOCI On partial dispositions of jointly controlled foreign entities or associates the proportionate share of translation differences previously recognized in AOCI is reclassifed to proft or loss 423 BUSINESS COMBINATIONS The Company uses the acquisition method of accounting to account for business combinations The consideration transferred for the acquisition of a subsidiary includes the fair values of the assets transferred the liabilities incurred and the equity interests issued by the Company The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement Acquisition related costs are expensed as incurred Identifable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date For each acquisition the Company recognizes any noncontrolling interest in the acquiree either at fair value or at the noncontrolling interests proportionate share of the acquirees net assets NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS DECEMBER 31 2012 AND 2011 IN THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE AMOUNTS