CITY OF CHILLIWACK | 2024 Annual Report 88 89 2024 Annual Report | CITY OF CHILLIWACK CITY OF CHILLIWACK NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2024 CITY OF CHILLIWACK NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2024 City of Chilliwack Notes to Consolidated Financial Statements Year Ended December 31, 2024 General: The Municipality was reincorporated as a City in 1999 by way of Letters Patent under the Municipal Act, now the Local Government Act, a statute of the Province of British Columbia. Its principal activities include the provision of local government services to the residents of the incorporated area. These services include administrative, protective, transportation, recreational, water, sewer and fiscal services. 1 Significant accounting policies: (a) Basis of presentation: It is the City of Chilliwack's (the "City") policy to follow accounting principles generally accepted for British Columbia local governments and to apply such principles consistently. These consolidated financial statements include the operations of the General, Water, Sewer and Reserve Funds and the City's wholly owned subsidiaries, Chilliwack Economic Partners Corporation ("CEPCO") and Tourism Chilliwack Inc. ("Tourism"). These consolidated statements have been prepared using standards issued by the CPA Canada Public Sector Accounting Handbook. All material interfund and intercompany accounts and transactions have been eliminated. (b) Portfolio investments: Portfolio investments are carried at amortized cost. If it is determined that there is a permanent impairment in the value of an investment, it is written down to net realizable value. (c) Property under development: Property under development is recorded at the lower of cost or net realizable value and includes direct costs attributable to the project plus any capitalized interest if incurred. The properties are tangible capital assets under development. (d) Tangible capital assets: Tangible capital assets are recorded on the basis of cost less accumulated amortization. Cost includes amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost is amortized on a straight line basis over their estimated useful lives as follows: Asset Useful Life - Years Land n/a Land improvements 0-40 Buildings 40-50 Equipment 4-20 Vehicles 7-25 Engineering structures 10-100 Annual amortization is charged in the year of acquisition. Assets under construction are not amortized until the asset is available for productive use. Infrastructure related tangible capital assets that are contributed from developers as part of a development project, are recorded at fair market value at the date of contribution and recorded in revenue as developer contributions. Works of art and cultural and historic assets are not recorded as assets in these financial statements. (e) Inventories: Inventories of supplies are valued at the lower of cost and net realizable value, on a weighted average basis. (f) Revenue recognition: Revenues from municipal taxation, grants in lieu of taxes and utility charges are recognized when the levies are billed or billable to the property owner. Revenue from sales of services is recognized when the services are provided. Government grants are recognized when they are approved by senior governments and the conditions required to earn the grants have been completed. Development cost charges are recognized as revenue in the period the funds are expended on an eligible development project. Development cost charges collected, but not yet expended, are reported as an unearned revenue. (g) Use of estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and reported amounts of revenues and expenses as at the date of the financial statements. Areas that contain estimates include assumptions used in estimating provisions for accrued liabilities, contingent liabilities, estimated useful lives of tangible capital assets and the value of assets contributed to the City. City of Chilliwack Notes to Consolidated Financial Statements Year Ended December 31, 2024 (h) Contaminated sites: A liability for contaminated sites is recognized when a site is not in productive use and the following criteria are met: (i) An environmental standard exists; (ii) Contamination exceeds the environmental standard; (iii) The City is directly responsible or accepts responsibility; (iv) It is expected that future economic benefits will be given up; and (v) A reasonable estimate of the amount can be made. The liability is recognized as management's estimate of the cost of post-remediation including operation, maintenance and monitoring that are an integral part of the remediation strategy for a contaminated site. (i) Asset Retirement Obligations: An asset retirement obligation is recognized when, as at financial reporting date, all of the following criteria are met: (i) There is a legal obligation to incur retirement costs in relation to a tangible capital asset; (ii) The past transaction or event giving rise to the liability has occurred; (iii) It is expected that future economic benefits will be given up; and, (iv) A reasonable estimate of the amount can be made. The estimate of the asset retirement obligation includes costs directly attributable to the asset retirement activities and is recorded as a liability and increase to the related tangible capital assets if the tangible capital asset is in productive use. The asset retirement obligation is recorded as a liability and expense if the related tangible capital asset is unrecognized or no longer in productive use. 2 Adoption of new accounting standards: (a) PS3400 Revenue: On January 1, 2024, the City adopted Canadian public sector accounting standard PS3400 Revenue. The new accounting standard establishes a single framework to categorize revenue to enhance the consistency of revenue recognition and its measurement. The adoption of this new standard did not have an impact on the amounts presented in the financial statements. (b) PSG-8 Purchased Intangibles: On January 1, 2024, the City adopted Canadian public sector accounting guideline PSG-8 Purchased Intangibles. The new accounting guideline permits recognition of purchased intangibles that are acquired through an arm's length exchange transaction between willing parties provided the purchased intangible meets the recognition criteria for an asset. The adoption of this new guideline did not have an impact on the amounts presented in the financial statements (c) PS3160 Public Private Partnerships: On January 1, 2024, the City adopted Canadian public section accounting standard PS3160 Public Private Partnerships. The new accounting standard includes requirements for the recognition, measurement and classification of infrastructure procured through a public private partnership. The adoption of this new standard did not have an impact on the amounts presented in the financial statements. 3 Restricted assets: The City has restrictions on the portfolio investments and cash available for operational use as follows: 2024 2023 Cash 63,041,295 $ 86,980,019 $ Portfolio Investments 176,033,434 145,897,831 239,074,729 232,877,850 Inventories of supplies are valued at the lower of cost and net realizable value, on a weighted average basis. (f) Revenue recognition: Revenues from municipal taxation, grants in lieu of taxes and utility charges are recognized when the levies are billed or billable to the property owner. Revenue from sales of services is recognized when the services are provided. Government grants are recognized when they are approved by senior governments and the conditions required to earn the grants have been completed. Development cost charges are recognized as revenue in the period the funds are expended on an eligible development project. Development cost charges collected, but not yet expended, are reported as an unearned revenue. (g) Use of estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and reported amounts of revenues and expenses as at the date of the financial statements. Areas that contain estimates include assumptions used in estimating provisions for accrued liabilities, contingent liabilities, estimated useful lives of tangible capital assets and the value of assets contributed to the City. Actual results could differ from these estimates.
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