Al-`Aqar Healthcare REIT Annual Report 2019

06 FINANCIAL STATEMENT 132 For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the Fund determine whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. For the purpose of fair value disclosures, the Group and the Fund have determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of fair value hierarchy as explained above. 4. CRITICALACCOUNTINGJUDGEMENTSANDKEYSOURCESOFESTIMATIONUNCERTAINTY The preparation of the Group’s and of the Fund’s financial statements requires the Manager to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. 4.1 Judgements made in applying accounting policies In the process of applying the Group’s and the Fund’s accounting policies, the Manager has made the following judgements which have the most significant effect on the amounts recognised in the financial statements: Deferred taxation on investment properties For the purposes of measuring deferred tax liabilities or deferred tax assets arising from investment properties that are measured at fair value, the Group has concluded that investment properties are held under a business model whose objective is to consume substantially all of the economic benefits embodied based in the investment properties over time while others are held for eventual sale. As a result, the Group has measured deferred tax on changes in fair values of these investment properties using the income tax rate or the real property gain tax rate, as appropriate. 4.2 Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: (a) Fair value of investment properties The fair value of the Group’s and of the Fund’s investment properties has been arrived at on the basis of a valuation carried out by Messrs. VPC Alliance (Kajang) Sdn Bhd, Messrs. Knight Frank Malaysia Sdn Bhd and Messrs. Henry Butcher Malaysia Sdn Bhd, independent valuers not related to the Group and the Fund, in accordance with Malaysia Valuation Standards issued by the Board of Valuers, Appraisers and Estate Agents, Malaysia. Notes To The Financial Statements For The Financial Year Ended 31 December 2019 (Continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.15 Fair value measurement (Continued)