118 City of Chilliwack TOURISM CHILLIWACK INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2022 TOURISM CHILLIWACK INC. Notes to Consolidated Financial Statements (continued) Year ended December 31, 2022 4. Share capital: 2022 2021 Authorized: Unlimited common shares Issued with no par value: 100 Common shares $ 1 $ 1 5. Related party transactions and economic dependence: During the year, the City of Chilliwack (the "City") provided funds under operating agreements totaling $580,000 (2021 - $546,700) to the Company. The City has agreed to provide future annual operating funds based on a pre-determined formula. In addition, the Company had other sales transactions with the City in the aggregate amount of $70,229 (2021 - $88,318) and purchased services from the City totaling $319,368 (2021 - $226,661). The Company is a wholly-owned subsidiary of the City. All transactions with the City are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the parties. During the year the Company had sales of 41,968 (2021 - $39,801) and made purchases of goods and services of $83,813 (2021 - $22,816) with entities that have an individual on the Company's board of directors. These transactions were on the same terms and conditions as transactions with other parties. 6. Financial risks: The Company is exposed to financial risks from its use of financial instruments. Management does not believe that the Company's financial instruments are exposed to significant liquidity risk. Market risk is the risk that changes in market prices, such as interest rates, will affect the Company’s income. The Company's cash and term deposits include amounts on deposit with financial institutions that earn interest at market rates. The Company manages its cash by maximizing the interest income earned on excess funds while maintaining the liquidity necessary to conduct operations on a day-to-day basis. Fluctuations in market rates of interest would not have a significant effect on the Company's income. 8 TOURISM CHILLIWACK INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2022 TOURISM CHILLIWACK INC. Notes to Consolidated Financial Statements (continued) Year ended December 31, 2022 6. Financial instruments (continued): Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company is exposed to credit risk due to the potential non-collection of accounts receivable. The carrying value of cash, accounts receivable, accounts payable and accrued liabilities and deferred revenue approximate their fair value due to the relatively short periods to maturity of these items. There has been no change to the risk exposures outlined above from 2021. 7. Income taxes: The Company is exempt from income taxes under Section 149 of the Income Tax Act, Canada. 8. Employee future benefits: The Company and its employees contribute to the Municipal Pension Plan (a jointly trusteed pension plan). The board of trustees, representing plan members and employers, is responsible for administering the plan, including investment of assets and administration of benefits. The plan is a multi-employer defined benefit pension plan. Basic pension benefits are based on a formula. As at December 31, 2021, the plan has about 227,000 active members and approximately 118,000 retired members. Active members include approximately 42,000 contributors from local governments. Every three years, an actuarial valuation is performed to assess the financial position of the plan and adequacy of plan funding. The actuary determines an appropriate combined employer and member contribution rate to fund the plan. The actuary’s calculated contribution rate is based on the entry-age normal cost method, which produces the long-term rate of member and employer contributions sufficient to provide benefits for average future entrants to the plan. This rate may be adjusted for the amortization of any actuarial funding surplus and will be adjusted for the amortization of any unfunded actuarial liability. The most recent actuarial valuation for the Municipal Pension Plan as at December 31, 2021, indicated a $3,761 million funding surplus for basic pension benefits on a going concern basis. The Company expensed $57,808 (2021 - $45,587) for employer contributions to the plan in fiscal 2022. A portion of the 2022, 2021 and prior years contributions are included in accounts payable. The next valuation will be as at December 31, 2024, with results available in 2025. 9 Annual Report 2022 119
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