NOTES TO THE FINANCIAL STATEMENTS
(CONT’D)
31 DECEMBER 2015
2.
SIGNIFICANT ACCOUNTING POLICIES AND OTHER EXPLANATORY INFORMATION (CONT’D)
2A.
Significant accounting policies (cont’d)
Fair value measurement (cont’d)
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.
Provisions
A liability or provision is recognised when there is a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. A provision is made using best
estimates of the amount required in settlement and where the effect of the time value of money is material, the
amount recognised is the present value of the expenditures expected to be required to settle the obligation using
a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the
obligation. The increase in the provision due to passage of time is recognised as interest expense. Changes in
estimates are reflected in profit or loss in the reporting year they occur.
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