Page 51 - Demo

Note 2
Summary of Significant Accounting Policies and Reporting Practices (Cont’d) (b) Basis of Financial Reporting (Cont’d)
Valuation of Financial Assets and Liabilities
The Corporation’s financial assets and liabilities are generally measured as follows:
Financial Statement Component
Cash
Accounts receivable
Portfolio investments
Accounts payable and other accrued liabilities
Measurement
Cost
Lower of cost or net recoverable value Fair value
Cost
2022 2023
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Fair value is the amount of consideration agreed upon in an arm’s length transaction between knowledgeable, willing parties who are under no compulsion to act. The fair values of cash, accounts payable and other accrued liabilities are estimated to approximate their carrying values, because of the short term nature of these instruments.
Financial Assets
Financial assets are assets that could be used to discharge existing liabilities or finance future operations and are not for consumption in the normal course of operations.
Financial assets are the Corporation’s financial claims on external organizations and individuals, as well as cash at the end of the year.
Cash
Cash comprises of cash on hand and demand deposits.
Accounts receivable
Accounts receivable are recognized at the lower of cost or net recoverable value. A valuation allowance is recognized when recovery is uncertain.
Portfolio investments
Portfolio investments in limited partnerships are recognized at fair value. Fair value is determined by the limited partnerships based upon valuation techniques considered appropriate by the Corporation and may include techniques such as discounted cash flows, prevailing market values for instruments with similar characteristics and other pricing models as appropriate. The Corporation relies upon the General Partner’s valuation of the investments in the limited partnerships.
Unrealized gains and losses from changes in the fair value of portfolio investments are recognized in the Statement of Remeasurement Gains and Losses. Once realized, the cumulative gain or losses previously recognized in the Statement of Remeasurement Gains and Losses are recognized in net investment income.
Portfolio investments are reviewed on an annual basis for impairment. When there is a loss in the Corporation’s share of investment other than a temporary decline then the loss is adjusted and recognized in the Statement of Operations.
A write-down of a portfolio investment to reflect a loss in value is not reversed for a subsequent increase in value.
Purchases and dispositions of portfolio investments are recognized on the trade date. Management fees paid are expensed in the year.