MISC Annual Report 2019

36. FAIR VALUE DISCLOSURES (CONT’D.) Fair value information (cont’d.) Fair value of assets and liabilities carried at fair value Note Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000 Corporation At 31 December 2019 Financial assets: Quoted equity investment 19(a) 47,255 – – 47,255 Unquoted equity investments 19(a) – – 65,122 65,122 47,255 – 65,122 112,377 At 31 December 2018 Financial assets: Quoted equity investment 19(a) 47,786 – – 47,786 Unquoted equity investments 19(a) – – 73,850 73,850 47,786 – 73,850 121,636 Fair value of financial instruments not carried at fair value Carrying Note Level 1 Level 2 Level 3 Total amount RM’000 RM’000 RM’000 RM’000 RM’000 Corporation At 31 December 2019 Financial assets: Loans to subsidiaries 19(a) – 871,860 – 871,860 967,378 Finance lease receivables 19(d) – – 1,016,558 1,016,558 1,012,006 – 871,860 1,016,558 1,888,418 1,979,384 At 31 December 2018 Financial assets: Loans to subsidiaries 19(a) – 1,082,331 – 1,082,331 1,232,872 Finance lease receivables 19(d) – – 961,839 961,839 1,082,591 – 1,082,331 961,839 2,044,170 2,315,463 Financial liabilities: Loans from subsidiaries 19(c) – (213,014) – (213,014) (237,592) 36. FAIR VALUE DISCLOSURES (CONT’D.) Fair value information (cont’d.) Transfers between Level 1 and Level 2 fair values There has been no transfers between Level 1 and Level 2 fair values during the financial year. Level 1 fair value measurements Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical assets that the entity can assess at the measurement date. Level 2 fair value measurements Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the asset either directly or indirectly. The following are descriptions of the valuation techniques and inputs used in the fair value measurement for assets and liabilities that are categorised within Level 2 of the fair value hierarchy: Derivatives Interest rate swap contracts are valued using a valuation technique with market observable inputs. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, interest rate curves and forward rate curves. Non-derivative financial liabilities The fair value of the fixed rate loan and borrowings which is determined for disclosure purposes is calculated by discounting expected future cash flows at the market rate of interest at the end of the reporting period. Level 3 fair value measurements Level 3 fair value is estimated using unobservable inputs that are not based on observable market data. NOTES TO THE FINANCIAL STATEMENTS 31 December 2019 NOTES TO THE FINANCIAL STATEMENTS 31 December 2019 FINANCIAL STATEMENTS MISC BERHAD PEOPLE. PASSION. POSSIBILITIES ANNUAL REPORT 2019 346 347