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LIPPO MALLS INDONESIA RETAIL TRUST ANNUAL REPORT 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Fair value measurement
Fair value is taken to be the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (that is, an exit price). It is a market-based
measurement, not an entity-specific measurement. When measuring fair value, management uses the assumptions
that market participants would use when pricing the asset or liability under current market conditions, including
assumptions about risk. The entity’s intention to hold an asset or to settle or otherwise fulfil a liability is not taken
into account as relevant when measuring fair value.
In making the fair value measurement, management determines the following: (a) the particular asset or liability being
measured (these are identified and disclosed in the relevant notes below); (b) for a non-financial asset, the highest and
best use of the asset and whether the asset is used in combination with other assets or on a stand-alone basis; (c) the
market in which an orderly transaction would take place for the asset or liability; and (d) the appropriate valuation
techniques to use when measuring fair value. The valuation techniques used maximise the use of relevant observable
inputs and minimise unobservable inputs. These inputs are consistent with the inputs a market participant may use
when pricing the asset or liability.
The fair value measurements and related disclosures categorise the inputs to valuation techniques used to measure fair
value by using a fair value hierarchy of three levels. These are recurring fair value measurements unless stated otherwise
in the relevant notes to the financial statements. Level 1 inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the measurement date. Level 2 inputs are inputs other than
quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3
inputs are unobservable inputs for the asset or liability. The level is measured on the basis of the lowest level input
that is significant to the fair value measurement in its entirety. Transfers between levels of the fair value hierarchy are
deemed to have occurred at the beginning of the reporting year. If a financial instrument measured at fair value has
a bid price and an ask price, the price within the bid-ask spread or mid-market pricing that is most representative of
fair value in the circumstances is used to measure fair value regardless of where the input is categorised within the
fair value hierarchy. If there is no market, or the markets available are not active, the fair value is established by using
an acceptable valuation technique.
The carrying values of current financial instruments approximate their fair values due to the short-term maturity
of these instruments and the disclosures of fair value are not made when the carrying amount of current financial
instruments is a reasonable approximation of the fair value. The fair values of non-current financial instruments may
not be disclosed separately unless there are significant differences at the end of the reporting year and in the event
the fair values are disclosed in the relevant notes to the financial statements.
Net assets attributable to unitholders
Net assets attributable to unitholders represent residual interest in the net assets of the Trust. Distributions on units
are recognised as liabilities when they are declared. Units issued are recognised at the amount of proceeds received
net of incremental costs directly attributable to the transaction.
Notes to the Financial Statements
(Cont’d)
31 December 2014
