Annual Report - QuamIR

Notes to the Consolidated Financial Statements (Continued)
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on
historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
4
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom equal
the related actual results. The estimates and assumptions 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) Valuation of investment properties/recoverable
amount of prepaid land lease payments
The fair value of each investment property, and the recoverable
amount of prepaid land lease payments for which there
impairment indicators, are individually determined at each
balance sheet date by an independent valuer based on a market
value assessment. Knight Frank was engaged to carry out the
independent valuation of the Group’s investment property and
prepaid land lease payments portfolio as at 31 December 2011.
This valuation was carried out in accordance with the Valuation
Standards on Properties of the Hong Kong Institute of Surveyors
which defines market value as “the estimated amount for which
a property should exchange on the date of valuation between a
willing buyer and a willing seller in an arm’s-length transaction
after proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion”.
(a)
Knight Frank has derived the valuation of the Group’s property
portfolio by capitalising the rental income derived from existing
tenancies with due provision for reversionary income potential
and where appropriate, by reference to market comparable
transactions. The assumptions are based on market conditions
existing at the balance sheet date.
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