2019 Annual Report

Annual Report 2019 111 TOURISM CHILLIWACK INC. Notes to Consolidated Financial Statements (continued) Year ended December 31, 2019 5. Share capital: 2019 2018 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 $512,100 (2018 - $466,000) 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 $90,975 (2018 - $35,519) and purchased services from the City totaling $17,853 (2018 - $14,338). The Company is a wholly-owned subsidiary of the City. See also note 11. 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 $50,867 (2018 - $29,076) and made purchases of goods and services of $27,742 (2018 - $27,045) 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. 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. 8