ANNUAL REPORT 2008/09 - BC Transit

BRITISH COLUMBIA TRANSITNotes to Financial StatementsYear ended March 31, 2009 ($000)12. Victoria Regional Transit Fund:BC Transit holds funds in trust on behalf of the Victoria Regional Transit Commission. Thesefunds are not included in the financial statements. The fund balance and transactions during theyear are as follows:2009 2008Fund balance, beginning of year $ 987 $ 2,475Revenue:Fuel tax 11,145 8,085Property tax 14,663 12,888Interest earned 62 227Contributions (24,782) (22,688)Fund balance, end of year $ 2,075 $ 98713. Financial instruments:(a) Fair value:The carrying value of cash and cash equivalents, accounts receivable and accounts payableand accrued liabilities approximate their fair value due to the relatively short periods tomaturity of the instruments. The estimated fair value of obligations under capital leasesapproximates their carrying value as they bear interest at rates approximating current marketrates. Debt sinking funds are reflected on the balance sheet at fair value. The fair value oflong-term debt at March 31, 2009 is $144,480 (2008 - $126,528).In evaluating the fair value information, considerable judgment is required to interpret themarket data used to develop the estimates. The use of different market assumptions and/ordifferent valuation techniques may have a material effect on the estimated fair value amountsfor financial instruments. Accordingly, the estimates of fair value presented herein may notbe indicative of the amounts that could be realized in a current market exchange.(b) Risks associated with financial assets and liabilities:BC Transit is exposed to financial risks from its financial assets and liabilities. The financialrisks include market risk relating to commodity prices, interest rates and foreign exchangerisks as well as credit risk and liquidity risk.Market Risk:Market risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in market prices. Market risk is comprised of commodity pricerisk, interest rate risk and foreign exchange risk and is discussed below.1951BC TRANSIT 2008/09 ANNUAL REPORT