AL-SALAM REIT ANNUAL REPORT 2020

136 AL-SALĀM REIT NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CONT’D) 3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES The preparation of the Group's and the Fund's financial statements requires management to make judgements, estimates and assumptions that effect the reported amounts of the revenue, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. 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. 3.1 Critical judgements made in applying accounting policies T here are no critical judgements made by management in the process of applying the Group’s and the Fund’s accounting policies that have a significant effect on the amounts recognised in the financial statements. 3.2 Key sources of estimation uncertainty T he 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 amount of assets and liabilities of the Fund within the next financial year are discussed below: Fair value of investment properties T he Group and the Fund carry their investment properties at fair value, with changes in fair values being recognised in profit or loss. The Group and the Fund had engaged an independent professional valuer to determine the fair value and there are no material events that affect the valuation between the valuation date and financial year end. T he determined fair value of the investment properties by the independent professional valuer is most sensitive to the estimated yield rate and discount rate. The range of the yield rate and the discount rate used in the valuation is described in Note 10. T he following table demonstrates the sensitivity of the fair value measurement to changes in estimated term yield rate, discount rate and its corresponding sensitivity result in a higher or lower fair value measurement: Fair value Increase/(decrease) 2020 2019 RM RM Yield rate - 0.25% 18,717,000 17,583,000 + 0.25% (15,127,000) (16,744,000) Discount rate - 0.25% 25,514,000 26,161,000 + 0.25% (25,730,000) (24,122,000) 4. GROSS RENTAL INCOME Group Fund 2020 2019 2020 2019 RM RM RM RM Rental income: - Base rental income 72,671,853 75,452,508 72,671,853 75,452,508 - Unbilled rental income 4,421,638 4,214,668 4,421,638 4,214,668 Percentage rent - 3,208,897 - 3,208,897 Service charges 5,258,875 5,666,040 5,258,875 5,666,040 82,352,366 88,542,113 82,352,366 88,542,113