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CDL
HOSPITALITY TRUSTS
28 DETERMINATION OF FAIR VALUES
A number of the Stapled Group’s accounting policies and disclosures require the determination of fair value, for
both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or
disclosure purposes based on the following methods. When applicable, further information about the assumptions
made in determining fair values is disclosed in the notes specific to that asset or liability.
(i)
Investment properties
The fair values of investment properties (Level 3 fair values) are based on independent valuations undertaken.
Further information is set out in Note 5.
(ii) Trade and other receivables
The fair values of trade and other receivables are estimated at the present value of future cash flows,
discounted at the market rate of interest at the measurement date. Short-term receivables and with no stated
interest rate are measured at the original invoice amount if the effect of discounting is immaterial. Fair value
is determined at initial recognition and for disclosure purposes, at each annual reporting date.
(iii) Other financial assets
Notional amounts of other financial assets (including cash and cash equivalents and rental deposits) whose
carrying amounts measured on the amortised cost basis, where applicable, approximate their fair values due
to short term in nature or where the effect of discounting is immaterial. Fair value is determined at initial
recognition and for disclosure purposes, at each annual reporting date.
(iv) Derivatives
The fair values of interest rate swaps (Level 2 fair values) are based on banks’ quotes. These quotes are tested
for reasonableness by discounting estimated future cash flows based on the terms and maturity of each
contract and using market interest rates for a similar instrument at the measurement date. Fair values reflect
the credit risk of the instrument and include adjustments to take into account the credit risk of the Stapled
Group and counterparty when appropriate.
(v) Other non-derivative financial liabilities
Other non-derivative financial liabilities (including loans and borrowings, trade and other payables and
rental deposits) are measured at fair value at initial recognition and for disclosure purposes, at each annual
reporting date. The fair values of non-derivative financial liabilities with a maturity of less than one year are
assumed to approximate their carrying values because of the short period to maturity. The fair values of other
non-derivative financial liabilities are calculated based on the present value of future principal and interest
cash flows, discounted at the market rate of interest at the measurement date.
NOTES TO THE FINANCIAL STATEMENTS
