NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2024 2 BASIS OF PREPARATION (CONT’D) 2.4 Use of estimates and judgement (cont’d) Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is described in the following notes: Note 3.1(i) Accounting for acquisitions as business combinations or asset acquisitions Notes 3.1(iv), 43 and 44 Assessment of ability to control or exert significant influence over partly owned investments Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is described in the following notes: Notes 4 and 5 Measurement of recoverable amounts of property, plant and equipment, and investment properties Notes 7 and 41 Measurement of recoverable amounts of investments in subsidiaries and expected credit losses on balances with subsidiaries Note 13 Measurement of realisable amounts of development properties Measurement of fair values A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets, and financial and non-financial liabilities. The Group has an established control framework with respect to the measurement of fair values. This includes a team that regularly reviews significant unobservable inputs and valuation adjustments and reports to the Group Chief Financial Officer who has overall responsibility for all significant fair value measurements. If third party information, such as broker quotes or independent valuers’ report, is used to measure fair values, then the team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of SFRS(I), including the level in the fair value hierarchy in which the valuations should be classified. Significant valuation issues are reported to the Group’s Audit & Risk Committee and Board of Directors. When measuring the fair value of an asset or a liability, the Group uses observable market 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 in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). • Level 3: inputs for the asset 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 Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred. Further information about assumptions made in measuring fair values is included in the following notes: Note 4 Property, plant and equipment Note 5 Investment properties Note 39 Acquisition of subsidiaries Note 41 Financial instruments FINANCIALS CITY DEVELOPMENTS LIMITED 102
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