ANNUAL REPORT 2015 |
125
NOTES TO THE FINANCIAL STATEMENTS
30 June 2015 (cont’d)
6. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (cont’d)
6.3 Key sources of estimation uncertainty (cont’d)
(f) Impairment of receivables
The Group makes impairment of receivables based on an assessment of the recoverability of receivables.
Impairment is applied to receivables where events or changes in circumstances indicate that the carrying amounts
may not be recoverable. Management specifically analyses historical bad debt, customer concentration, customer
creditworthiness, current economic trends and changes in customer payment terms when making a judgement
to evaluate the adequacy of impairment of receivables. Where expectations differ from the original estimates, the
differences would impact the carrying amount of receivables.
(g) Fair values of borrowings
The fair values of borrowings are estimated by discounting future contractual cash flows at the current market
interest rates available to the Group for similar financial instruments. It is assumed that the effective interest
rates approximate the current market interest rates available to the Group based on its size and its business risk.
Sensitivity analysis of the effects of interest rate risk has been disclosed in Note 37 to the financial statements.
(h) Provision for restoration costs
The Group estimates provision for restoration costs based on historical costs incurred per square feet of sales
area. The estimated provision for restoration costs are reviewed periodically and are updated if expectations differ
from previous estimates due to changes in cost factors. Where expectations differ from the original estimates, the
differences would impact the carrying amount of provision for restoration costs.
(i) Impairment of investments in subsidiaries and impairment of amounts owing by subsidiaries
Management reviews the investments in subsidiaries for impairment when there is an indication of impairment
and assess the impairment of amounts owing by subsidiaries when the receivables are long outstanding. The
recoverable amounts of the investments in subsidiaries and amounts owing by subsidiaries are assessed by
reference to the fair value of the underlying assets.
(j) Fair value measurement
The financial and non-financial assets and liabilities that are measured subsequent to initial recognition at fair value
are grouped into Level 1 to Level 3 based on the degree to which the fair value inputs are observable:
(i) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for
identical assets or liabilities;
(ii) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
(iii) Level 3 fair value measurements are those derived from inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The classification of an item into the above levels is based on the lowest level of the inputs used in the fair value
measurement of the item. Transfers of items between levels are recognised in the period they occur.
The Group engages several professional valuers to perform valuations on various assets as disclosed separately
in the respective notes to the financial statements. These valuation reports would be tabled annually to the Audit
Committee for approval, where applicable.
The Group measures these elements in the financial statements at fair value:
(i) Investment properties, Note 8 to the financial statements; and
(ii) Financial instruments, Note 36 to the financial statements.
