CITY OF CHILLIWACK 2025 Annual Report 94 95 2025 Annual Report CITY OF CHILLIWACK CHILLIWACK ECONOMIC PARTNERS CORPORATION (CEPCO) NOTES TO FINANCIAL STATEMENTS Year Ended December 31, 2025 CHILLIWACK ECONOMIC PARTNERS CORPORATION Notes to Financial Statements Year ended December 31, 2025 Basis of presentation: Chilliwack Economic Partners Corporation (the "Corporation") is wholly owned by the City of Chilliwack (the "City") and is responsible for economic development activity within the City's boundaries. 1. Significant accounting policies: These financial statements are prepared in accordance with the CPA Canada Public Sector Accounting Handbook. The Corporation's significant accounting policies are as follows: (a) Investments: Investments are recorded at amortized cost plus accrued interest. If it is determined that there is a permanent impairment in the value of an investment, it is written down to net realizable value. (b) Property under development: Property under development is recorded at the lower of cost and net realizable value and includes direct costs and capitalized interest. (c) Tangible capital assets: Tangible capital assets are recorded at cost. Website costs include hardware and software costs, graphics designs and major enhancements. Website maintenance and ancillary costs are expensed. Amortization commences in the year that the asset is put into use and is provided for using the following methods and annual rates: Asset Basis Rate Buildings Declining balance 4% Computer and office equipment Declining balance 20% - 30% Telecommunication equipment Declining balance 20% Leasehold improvements are amortized on the straight-line basis over the term of the lease plus one renewal period if it is anticipated that the lease will be renewed. Website costs are amortized on the straight-line basis over three years. 5 CHILLIWACK ECONOMIC PARTNERS CORPORATION (CEPCO) NOTES TO FINANCIAL STATEMENTS Year Ended December 31, 2025 CHILLIWACK ECONOMIC PARTNERS CORPORATION Notes to Financial Statements (continued) Year ended December 31, 2025 1. Significant accounting policies (continued): (d) Revenue recognition: Revenues are recognized on the accrual basis according to the terms of the contractual agreements. Government grants are recognized when they are approved by senior governments and conditions required to earn the grants have been completed. Contributions restricted for the purchase of capital assets are deferred and amortized into revenue on the basis corresponding with the amortization rate for the related capital assets. (e) Budget figures: Budget figures represent the budget approved by the Board of Directors on December 11, 2024. (f) Use of estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual results could differ from those estimates. (g) Asset retirement obligation: An asset retirement obligation is recognized when, as at the 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 Corporation's asset retirement obligation is primarily related to the removal of asbestos in certain buildings. 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. The amount capitalized in tangible capital assets is amortized using the amortization accounting policy outlined in note 1(c). The carrying value of the liability is reconsidered at each financial reporting date with changes to the timing or amount of the original estimate of cash flows recorded as an adjustment to the asset retirement obligation liability and tangible capital assets. 6
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