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2 BASIS OF PREPARATION (CONT’D)
2.4 Use of estimates and judgements (cont’d)
Measurement of fair values (cont’d)
When measuring the fair value of an asset or a liability, the H-REIT Manager and the HBT Trustee-Manager use 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 within Level 1 that are observable for the asset or liability,
either directly (i.e. prices) or indirectly (i.e. derived from prices).
• Level 3:
unobservable inputs for the assets 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 fall into 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 Stapled Group recognises transfers between levels of the fair value hierarchy as of the end of the financial year
during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
• Note 4 – Impairment of property, plant and equipment and prepaid land lease
• Note 5 – Valuation of investment properties
• Note 27 – Valuation of financial instruments
3 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied by the HBT Group, the H-REIT Group and the Stapled Group
consistently to all periods presented in these financial statements.
3.1 Consolidation
Stapling
Where entities enter into a stapling arrangement, the stapling arrangement is accounted for as a business combination
under the acquisition method.
Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on
which control is transferred to the Group.
The Stapled Group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
•
the recognised amount of any non-controlling interest in the acquiree; plus
•
if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree,
over the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
Any goodwill that arises is tested annually for impairment.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
NOTES TO THE FINANCIAL STATEMENTS
