TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements for the period ended 30 June 2015
Note 5: Fair Value Measurements
The following tables provide an analysis of assets and liabilities that are measured at fair value. The different levels of the fair value hierarchy are defined below.
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
Note 5A: Valuation Measurements. Valuation Technique and Inputs Used
| Fair value measurements at the end of the reporting period | For Levels 2 and 3 fair value measurements 2 | ||||
|
2015 $'000 |
2014 $'000 |
Category (Level 1, 2 or 3)3 | Valuation technique(s)1 | Inputs used | |
| Non-financial assets | |||||
| Land | 9,215 | 9,360 | Level 2 | Market valuation | Sales prices of comparable land adjusted for property size, location, topography, and other inherent attributes. |
| Buildings on freehold land | 26,174 | 22,715 | Level 3 | Depreciated Current Replacement Cost | Construction costs of replacement assets having similar service potential including preliminaries and professional fees, adjusted for the consumed economic benefit and/or obsolescence of the asset. |
| Leasehold improvements | 135 | 161 | Level 3 | Depreciated Current Replacement Cost | Construction costs of replacement assets having similar service potential including preliminaries and professional fees, adjusted for the consumed economic benefit and/or obsolescence of the asset. |
| Heritage and cultural | 60 | 60 | Level 3 | Depreciated Current Replacement Cost | Sales prices of similar artwork adjusted for the Condition Rating and cost of achieving a sale. |
| Total non-financial assets | 35,584 | 32,296 | |||
1. No change in valuation technique occurred during the period.
2. The entity has chosen to early adopt AASB 2015-7 Amendments to Australian Accounting Standards - Fair Value Disclosures of Non-for-Profit Public Sector entities at 30 June 2015. The future economic benefits of the entity's non-financial assets are not primarily dependent on their ability to generate cash flows. The entity has not disclosed qualitative information about the significant unobservable inputs or a narrative description of the sensitivities of the fair value measurements to changes in the unobservable inputs.
3. Buildings on freehold land and leasehold improvements were re-categorised from level 2 to level 3.
TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements for the period ended 30 June 2015
Fair value measurements - highest and best use differs from current use for non-financial assets
The highest and best use of all non-financial assets are the same as their current use.
Recurring and non-recurring Level 3 fair value measurements - valuation processes
The TSRA procured valuation services from Neil Teves - AAPI Registered Valuer No. 382, and relied on valuation models provided by Mr Teves. The entity tests the procedures of the valuation model every 12 months. Mr Teves provided written assurance to the entity that the model developed is in compliance with AASB 13.
Note 5B: Reconciliation for Recurring Level 3 Fair Value Measurements
| Recurring Level 3 fair value measurements - reconciliation for assets | ||||||||||
| Non-Financial Assets | ||||||||||
| Buildings on freehold land | Buildings on freehold land | Leasehold improvements | Leasehold improvements | Other property, plant and equipment | Other property, plant and equipment | Heritage and cultural | Heritage and cultural | Total | Total | |
|
2015 $'000 |
2014 $'000 |
2015 $'000 |
2014 $'000 |
2015 $'000 |
2014 $'000 |
2015 $'000 |
2014 $'000 |
2015 $'000 |
2014 $'000 |
|
| As at 1 July | - | - | - | - | 1,522 | 1,580 | 60 | 60 | 1,582 | 1,640 |
| Purchases | - | - | - | - | 793 | 449 | - | - | 793 | 449 |
| Depreciation | - | - | - | - | (516) | (507) | - | - | (516) | (507) |
| Disposals | - | - | - | - | (70) | - | - | - | (70) | - |
| Transfers into Level 3 | 26,174 | - | 135 | - | - | - | - | - | 26,308 | - |
| Transfers out of Level 31 | - | - | - | - | (1,729) | - | - | - | (1,729) | - |
| Total as at 30 June | 26,174 | - | 135 | - | - | 1,522 | 60 | 60 | 26,368 | 1,582 |
1. Consistent with the FRR, other property, plant & equipment immaterial to the TSRA have been measured at cost. Accordingly other property, plant & equipment previously recorded as level 3 have been transferred out.