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 There 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. (a) Deferred taxation on investment properties For the purposes of measuring deferred tax liabilities arising from investment properties that are measured at fair value, the Group and the Fund have concluded that certain investment properties are held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time while others are held for eventual sale. As a result, the Group and the Fund have measured deferred tax on changes in fair values of these investment properties using the corporate income tax rate or the real property gains tax rate, as appropriate. 3.2 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 amount of assets and liabilities of the Fund within the next financial year are discussed below: Fair value of investment properties The 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. The 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. The 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) 2021 2020 RM RM Yield rate - 0.25% 28,732,000 18,717,000 + 0.25% (32,363,000) (15,127,000) Discount rate - 0.25% 10,011,000 25,514,000 + 0.25% (15,498,000) (25,730,000) A L - S A L Ā M R E I T A N N U A L R E P O R T 2 0 2 1 154 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2021 (CONT’D)
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