Boston Pizza Royalties Income Fund is a public company that has over 340 Boston Pizza locations in Canada. Pizza Pizza Limited is a privately held company that has over 500 locations in Canada.

Instructions

(a) Although the companies are similar, Boston Pizza is a public company while Pizza Pizza is privately held. Why do you think the two companies chose different types of ownership structure?

(b) When Boston Pizza or Pizza Pizza purchases new restaurants, part of the payment may be in shares of the company.

How would Boston Pizza determine the fair value of its shares (which it calls units) for this purpose? How would Pizza Pizza determine the fair value of its shares? Which fair value measure would be the more reliable?

(c) Since Boston Pizza is a public company, it uses IFRS and is required to disclose earnings per share. Pizza Pizza uses ASPE and is not required to report earnings per share. Why do you think the standard setters do not require private companies to disclose their earnings per share?