City of Surrey 2019 Annual Financial Report

NOTESTOTHE CONSOLIDATED CITY OF SURREY  FINANCIAL STATEMENTS

For the year ended December 31, 2019 [tabular amounts in thousands of dollars]

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) b) Basis of consolidation (continued) iv) Surrey City Development Corporation (continued)

iii) Surrey City Investment Corporation (“SCIC”) – (100% owned and fully consolidated) SCIC is an investment holding entity set up for mixed-use real estate development projects in the City. Prior to

October 8, 2018 SCIC held a 24.4% and 50% ownership in Surrey Centre Limited Partnerships and Surrey Centre Tower Holdings. On October 9, 2018 SCIC disposed of its ownership interests in these entities, which resulted in a net gain on sale. SCIC is inactive as at December 31, 2019. iv) Kwantlen Park Development Corporation (“KPDC”) - (100% owned and fully consolidated) KPDC is inactive as at December 31, 2019. v) Surrey Homelessness and Housing Society On June 22, 2007, the City of Surrey incorporated the SHHS. The purposes of the Society are to raise funds for financing programs and projects that address homelessness in Surrey. The City is considered to have control over the Society’s functions; therefore, the Society’s financial information is fully consolidated within the City’s financial statements. The consolidated financial statements include the assets, liabilities, revenues and expenses of SHHS. The City provided seed money to the SHHS and oversees its operations. vi) Innovation Boulevard Corporation The City of Surrey and Simon Fraser University (“SFU”) incorporated the Innovation Boulevard Corporation (“IBC”), a government partnership. SFU and the City are the only shareholders of IBC with each having a 50% interest and is proportionately consolidated. The purpose of IBC is the development of an integrated innovation and technology hub in Surrey. On January 30, 2020, IBC along with its subsidiary, Innovation Boulevard Society, closed operations and the entities were dissolved. The dissolution of these entities had no material financial impact on the City of Surrey. c) Cash and cash equivalents Cash and cash equivalents include cash and short-term investments with maturities of three months or less at the date of acquisition, are readily convertible to known amounts of cash and are subject to an insignificant risk of change in value. d) Trust Funds These funds account for assets which must be administered as directed by agreement or statute for certain beneficiaries. In accordance with PSAB recommendations on financial statement presentation for local governments, trust funds are not included in the City’s consolidated financial statements. Trust funds administered by the City are presented in Note 18. e) Revenue recognition Revenues are recognized in the period in which the transaction or event occurs that give rise to the revenues or when the services are delivered. All revenues are recorded on an accrual basis, except when the amounts cannot be determined with a reasonable degree of certainty or when their estimation is impractical. Revenue recognition on sales of properties occurs when the City has transferred the significant risks and rewards of ownership. Property lease revenue includes all amounts earned from tenants, including property tax and operating cost recoveries. Lease revenues are recognized on a straight-line basis over the term of the lease.

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