ASSOCIATION OF ALBERTA MUNICIPALITIES

Notes to the Consolidated Financial Statements

Year ended December 31, 2022

1.Significant accounting policies (continued):

(d)Software service assets

On November 15, 2022, the Accounting Standards Board issued new Accounting Guideline AcG-20, “Customer’s Accounting for Cloud Computing Arrangements” (AcG-20) to provide guidance related to the accounting treatment of costs associated with the implementation and use of software accessed under cloud computing arrangements. AcG-20 is applicable to annual financial statements relating to fiscal years beginning on or after January 1, 2024, with earlier application permitted.

During the years ended December 31, 2021 and December 31, 2022, ABmunis incurred costs related to implementation of software applications under cloud computing arrangements. As such, ABmunis has elected to early adopt AcG-20 for the year ended December 31, 2022 and apply the prescribed treatment to these costs. ABmunis has chosen not to apply the simplification approach permitted under AcG-20 and has applied the guideline retrospectively to expenditures on implementation activities incurred in cloud computing arrangements. ABmunis has capitalized the expenditures on implementation activities that are directly attributable to preparing the software service for its intended use as Software service assets on the Statement of Financial Position. The amount capitalized will be expensed using a straight-line method over the expected period of access of the software service and is reflected within Systems and equipment maintenance on the Statement of Operations (see note 7).

For the year ended December 31, 2021, capitalized implementation costs were reclassified from intangible assets to software service assets on the Statement of Financial Position to comply with the AcG-20 requirements. There was no effect to the net deficiency of revenues and expenditures recorded in the statement of operations as a result of the adoption and retropective application of this standard.

(e)Capital assets:

Capital assets are recorded at cost less accumulated amortization. Repairs and maintenance costs are charged to expense. Betterments which extend the estimated life of an asset are capitalized. The cost of a capital asset comprises its purchase price and any directly attributable cost of preparing the asset for its intended use.

When a capital asset no longer contributes to ABmunis's ability to provide services, its carrying amount is written down to its residual value.

Capital assets are comprised of the following:

(i)Tangible assets:

Amortization is provided for using the straight-line method at the following annual rates: