ASSOCIATION OF ALBERTA MUNICIPALITIES

Notes to the Consolidated Financial Statements

Year ended December 31, 2022

1. Significant accounting policies (continued):

(ii) Intangible assets:

Intangible assets consist of acquired computer application software for daily operations. Amortization is provided for using the straight-line method at 10 - 33%, depending on the useful life of the asset.

(f) Revenue recognition:

ABmunis operates a group benefits plan providing benefits coverage for extended health care and dental policies on an Administrative Services Only ("ASO") program basis and providing insurance coverage for disability and life policies. ABmunis also operates an insurance plan providing insurance for liability, property, and automobile policies. Both ASO benefit premiums and commissions on insurance policies are recognized as revenue over the term of the related policy period.

ABmunis follows the deferral method of accounting for grant contributions. Restricted grant contributions are recognized as revenue in the year in which the related expenses are incurred. Unrestricted grant contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is assured.

Agency and administration fees are recognized when services are performed.

Energy retail fees are earned on an energy consumption basis based on rates included in the Energy Member Master Agreements and are recorded as the energy is delivered. The energy retail fees include an estimate of the value of electricity and natural gas consumed by customers billed subsequent to the reporting period.

Rental revenue is recognized on a straight-line basis over the terms of the leases.

Clean Energy Improvement Program (CEIP) program administration fees are recognized on a completed contract basis.

Interest, dividends, net realized gains and losses on sale of investments and net unrealized gains and losses (less transaction costs) are included in net investment income and are recognized on an accrual basis when earned. Investment income earned on restricted grant contributions is recorded as an increase to deferred contributions as accrued or as investment earnings, in accordance with the terms of the respective grant.

Membership fees are recognized at the beginning of each fiscal year when they are invoiced.

Convention and workshop revenues are recognized in conjunction with the occurrence of the event.

Revenues from fees related to other CEIP services, retirement services, member services, investment management services, purchasing program and managed technology services are recognized when the services are performed.

Grant administration recoveries are recognized as revenue when the services have been provided. Benefits surplus (deficit) on disability and life policies is recorded in the year in which the amount is fixed or determinable and settlement of the amount is reasonably assured.