2015 Financial Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS City of Surrey

For the year ended December 31, 2015 [tabular amounts in thousands of dollars]

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) k) Non-financial assets (continued) iii) Contributions of tangible capital assets

Tangible capital assets received as contributions are recorded at their fair value at the date of receipt and are recorded as revenue. These assets include some land, road infrastructure, water and wastewater infrastructure, machinery and equipment assets. iv) Intangible assets Intangible assets, including works of art and historic assets are not recorded as assets in these financial statements. v) Leases Leases are classified as capital or operating leases. Leases that transfer substantially all the benefits and risks incidental to ownership of the property are accounted for as capital leases and the related asset and obligation are recorded on the statement of financial position. All other leases are accounted for as operating leases and the related lease payments are expensed as incurred. vi) Inventories of supplies Inventories of supplies held for consumption are recorded at the lower of cost and replacement cost. l) Use of estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the period. Significant estimates include assumptions used in estimating contributed tangible capital assets, developer contributions, useful lives for amortization, provisions for accrued liabilities, contingencies and in performing actuarial valuations of employee future benefits. A segment is defined as a distinguishable activity or group of activities of a government for which it is appropriate to separately report financial information to achieve the objectives of the standard. The City of Surrey has provided definitions of segments used by the City as well as presented financial information in segmented format (note 22). n) Liabilities for contaminated sites Contaminated sites are a result of contamination being introduced into air, soil, water or sediment of a chemical, organic or radioactive material or live organism that exceeds an environmental standard. A liability for remediation of contaminated sites is recognized when a site is not in productive use and all of the following criteria are met: Actual results could differ from these estimates. m) Segment disclosure

• An environmental standard exists; • Contamination exceeds an environmental standard; • The City is directly responsible or accepts responsibility; • The City expects that future economic benefits will be given up; and, • A reasonable estimate of the amount can be made.

The liability is measured as management’s estimate of the cost of post remediation, including operations, maintenance and monitoring, which are an integral part of the remediation strategy for a contaminated site. The liability is recorded net of any expected recoveries.

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