2018 Annual Report

Annual Report 2018 100 TOURISM CHILLIWACK INC. Notes to Consolidated Financial Statements (continued) Year ended December 31, 2018 5. Share capital: 2018 2017 Authorized: Unlimited Common shares Issued with no par value: 100 Common shares $ 1 $ 1 6. Related party transactions and economic dependence: During the year, the City of Chilliwack (the "City") provided funds under operating agreements totalling $466,000 (2017 - $460,000) to the Company. The City has agreed to provide future annual operating funds based on a pre-determined formula. The Company is a wholly-owned subsidiary of the City. See also note 11. 7. Financial instruments: 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. 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. The carrying value of long-term investments approximate their fair value based on their market-based interest rates. 8