2 BASIS OF PREPARATION
(continued)
2.4 Use of estimates and judgements
(continued)
Measurement of fair values
(continued)
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 data).
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 5 – Valuation of investment properties
• Note 25 – Valuation of financial instruments
2.5 Changes in accounting policies
Joint Arrangements
From 1 January 2014, as a result of FRS 111 Joint Arrangements, the Group has changed
its accounting policy for its interests in joint arrangements. Under FRS 111, the Group has
classified its interests in joint arrangements as either joint operations (if the Group has
rights to the assets, and obligations for the liabilities, relating to an arrangement) or joint
ventures (if the Group has rights only to the net assets of an arrangement). When making
this assessment, the Group considered the structure of the arrangements, the legal form
of any separate vehicles, the contractual terms of the arrangements and other facts and
circumstances. Previously, the structure of the arrangement was the sole focus of
classification.
At 31 December 2013, the Group had investments under joint arrangements. RCS Trust,
Infinity Mall Trust and Infinity Office Trust were accounted for as jointly-controlled entities
using the proportionate consolidation method.
Notes to the Financial Statements
Year ended 31 December 2014
150 | CapitaMall Trust Annual Report 2014
