2023 Annual Report I CITY OF CHILLIWACK CITY OF CHILLIWACK I 2023 Annual Report 104 105 CHILLIWACK ECONOMIC PARTNERS CORPORATION (CEPCO) NOTES TO FINANCIAL STATEMENTS Year Ended December 31, 2023 CHILLIWACK ECONOMIC PARTNERS CORPORATION Notes to Financial Statements (continued) Year ended December 31, 2023 1. Significant accounting policies (continued): (e) Budget figures: Budget figures represent the budget approved by the Board of Directors on December 14, 2022. (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. 2. Adoption of new accounting standard: On January 1, 2023, the Corporation adopted Canadian public sector accounting standard PS 3280 Asset Retirement Obligations. The new accounting standard addresses the reporting of legal obligations associated with the retirement of certain tangible capital assets. The Corporation has adopted the new accounting standard using the prospective method, which applies the obligation from the date of adoption to the expected date of remediation. 6 CHILLIWACK ECONOMIC PARTNERS CORPORATION (CEPCO) NOTES TO FINANCIAL STATEMENTS Year Ended December 31, 2023 CHILLIWACK ECONOMIC PARTNERS CORPORATION Notes to Financial Statements (continued) Year ended December 31, 2023 2. Adoption of new accounting standard (continued): As a result of the adoption of the new standard, the Corporation set up an obligation of $73,727 as of January 1, 2023 and increased the corresponding tangible capital asset by the same amount. The obligation is then increased over time as the underlying asset approaches it's expected retirement date. The accretion of the liability is recorded as an expense within common area costs. 3. Bank operating lines: The Corporation has an operating line of credit for a maximum of $1,000,000 (2022 - $1,000,000) that is due on demand, bears interest at prime plus 0.20%. No funds were drawn on the line of credit as at December 31, 2023. The Corporation has a second operating line of credit for a maximum of $4,000,000 (2022 - $4,000,000) that is due on demand, bears interest at prime plus 0.20%. No funds were drawn on the line of credit as at December 31, 2023. The above lines of credit are secured by a mortgage over certain lands, a commercial security agreement, an assignment of rentals and indemnity agreement from the City for the portion of the mortgaged land owned by the City, and an assignment of insurance. 4. Property under development: 2023 2022 Canada Education Park: Land $ 1,353,755 $ 1,353,755 Roads, water, and sewer 1,709,289 1,709,289 Other improvements 195,748 195,748 3,258,792 3,258,792 Downtown Redevelopment: Land 4,146,075 3,991,564 Buildings 2,349,404 1,839,743 6,495,479 5,831,307 $ 9,754,271 $ 9,090,099 7
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