ENRA Group Berhad | Annual Report 2022 156 NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2022 36. FINANCIAL INSTRUMENTS (CONT’D) (b) Determination of fair value (Cont’d) (iii) Land entitlement payment – non current The fair value of land entitlement payment is estimated by the amount that would be payable upon settlement using a valuation technique with market observable inputs. (iv) Short term funds The fair values of short term funds are determined by reference to the exchange quoted market bid prices at the close of the business at the end of each reporting period. (v) Forward foreign currency contracts The fair value of a forward foreign exchange contract is the amount that would be payable or receivable upon termination of the outstanding position arising and valued using a valuation technique with market observable inputs. The derivatives arising from the forward currency contracts are stated at fair value using the prevailing market rate. The fair value changes are attributable to changes in foreign exchange spot and forward rate. (c) Fair value hierarchy Fair value is categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows: - Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. - Level 2 fair value measurements are those derived from inputs other than quoted prices included within 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 fair value measurements are those derived from inputs for the asset or liability that are not based on observable market data (unobservable inputs). The Group recognises transfers between levels of the fair value hierarchy as of the date of the event of change in circumstances that causes the transfers. The carrying amount of cash and cash equivalents, short term receivable and payables and short termborrowings reasonably approximate their fair values due to the relatively short term nature of these financial instruments.
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