NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
146
THE STRAITS TRADING COMPANY LIMITED
43.
FAIR VALUE OF ASSETS AND LIABILITIES (CONT’D)
C.
Level 2 fair value measurements
The following is a description of the valuation techniques and inputs used in the fair value measurements for assets
and liabilities that are categorised within Level 2 of the fair value hierarchy:
Derivatives (note 23): Forward
currency contracts, forward commodity contracts, interest rate swap contracts and
contract for differences are valued using a valuation technique with market observable inputs. These contracts are
valued by financial institutions.
D.
Level 3 fair value measurements
i)
Information about significant unobservable inputs used in Level 3 fair value measurements
The following table shows the information about fair value measurements using significant unobservable
inputs (level 3).
Description
Valuation
techniques
Key unobservable
inputs
Inter-relationships
between key
unobservable inputs and
fair value measurement
Recurring fair value
measurements
Land and buildings
in Malaysia
Comparison
method and
depreciated
replacement
cost method
– Comparable price:
$163 to $2,650 per
square meter (2014:
$148 to $3,022 per
square meter)
The estimated fair value
increases with higher
comparable price
Investment properties in
Singapore, Malaysia,
Australia and China
Income
capitalisation
method
– Capitalisation rate:
3.75% to 6.5%
The estimated fair value
varies inversely against
the capitalisation rate
– Rental rate:
$9.80 to $52.20 per
square meter
The estimated fair value
increases with higher
rental rate
– Net rental growth rate:
3.72%
The estimated fair value
increases with higher net
rental growth rate
