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REPORTS
3 BASIS OF PREPARATION (CONT’D)
3.4 Use of estimates and judgements (cont’d)
Measurement of fair values
A number of the Stapled Group’s accounting policies and disclosures require the measurement of fair values, for
both financial and non-financial assets and liabilities.
The H-REIT Manager and the HBT Trustee-Manager have an established control framework with respect to the
measurement of fair values. This includes a team that regularly reviews significant unobservable inputs and reports
directly to the Chief Financial Officer, who has overall responsibility for all significant fair value measurements.
The H-REIT Manager and the HBT Trustee-Manager regularly review significant unobservable inputs and valuation
adjustments included in the fair value measurements. If third party information, such as broker quotes or pricing
services, is used to measure fair value, then the H-REIT Manager and the HBT Trustee-Manager assess the evidence
obtained from the third parties to support the conclusion that such valuations meet the requirements of FRS,
including the level in the fair value hierarchy the resulting fair value estimate should be classified.
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).
Transfers between levels of the fair value hierarchy are recognised 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 5
– Valuation of investment properties
• Note 26
– Acquisition of subsidiary (determination of fair value of assets and liabilities)
• Note 27
– Valuation of financial instruments
4 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.
4.1 Consolidation
Stapling
Where entities enter into a stapling arrangement, the stapling arrangement is accounted for as a business
combination under the acquisition method.
NOTES TO THE FINANCIAL STATEMENTS
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Annual Report 2016