2017 Annual Report

56 City of Chilliwack 2017 Annual Report City of Chilliwack Notes to Consolidated Financial Statements Year Ended December 31, 2017 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's 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 and Tourism Chilliwack Inc. 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 and net realizable value and includes direct costs attributable to the project and capitalized interest. 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. Tangible capital assets received as contributions are recorded at their fair value at the date of receipt and also are recorded as revenue. 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 a development project. Development cost charges not expended are recorded as unearned revenue. City of Chilliwack Financial Statements