Notes to The
Financial Statements
Year ended 31 December 2015
2 Basis of preparation (Cont’d)
2.4 Use of estimates and judgments
The preparation of financial statements in conformity with RAP 7 requires the Manager to make judgments,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
In particular, information about assumptions and estimation uncertainties that have a significant risk of resulting in
a material adjustment within the next financial year are included in the following notes:
•
Note 4
–
fair value determination of investment properties; and
•
Note 24 –
valuation of financial instruments.
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both
financial and non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
•
Level 1:
Quoted prices (unadjusted) in active markets for identical assets or liabilities;
•
Level 2:
Inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
•
Level 3:
Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the
fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement (with Level 3 being the lowest).
The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period
during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
•
Note 4
–
fair value determination of investment properties; and
•
Note 24 –
valuation of financial instruments.
99
ParkwayLife REIT
Annual Report 2015
