112
ANNUAL REPORT 2016
NOTES TOTHE FINANCIAL STATEMENTS
30 JUNE 2016
(Continued)
6.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
6.3 Key sources of estimation uncertainty (continued)
(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 38 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 higher or their fair values less
cost to sell and their value in use of the respective subsidiaries.
Estimating value in use requires management to make an estimate of the expected future cash flows to be derived from
continuing use of the asset and from its ultimate disposal, expectations about possible variations in the amount, timing of those
cash flows, the time value of money, price for inherent uncertainty risk and other relevant factors.
(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.
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 37 to the financial statements.
