FORGING AHEAD - Tradewinds Plantation Berhad

36. FINANCIAL INSTRUMENTS (continued)
(c) Fair values (continued)
Methods and assumptions used to estimate fair value of financial instruments
(i) Financial instruments that are not carried at fair value and whose carrying amounts are at reasonable approximation
of fair value.
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, receivables, payables
and borrowings, are reasonable approximation of fair value, either due to their relatively short term nature or
that they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting
period.
The fair values of borrowings are estimated based on future contractual cash flows discounted at market lending
rate for similar types of lending or borrowing arrangements at the end of the reporting period.
The fair value of the liability component of ICULS is determined by discounting the future contractual cash flows
of interest payments at the prevailing market rate for equivalent non-convertible loan stocks.
(ii) Amount owing to a subsidiary and borrowings with fixed interest rate and are accounted for as long term
financial liabilities.
The fair values of these financial instruments are estimated based on future contractual cash flows discounted at
market lending rate for similar types of lending or borrowing arrangements at the end of the reporting period.
(iii) Quoted shares
Fair value is determined directly by reference to their published market bid price at the end of the reporting
period.
(iv) Unquoted shares
Fair value is estimated using a relative valuation technique based on the price earnings ratio of a public listed
entity with similar business activities obtained from the market, discounted by 20% to reflect its listing premium.
Management believes that the estimated fair value resulting from this valuation technique is reasonable and the
most appropriate at the end of the reporting period.
(v) Financial guarantees
FINANCIAL STATEMENTS
The Company provides guarantees to lenders for financing facilities extended to certain subsidiaries. The fair
value of such financial guarantees is negligible as the probability of the subsidiaries defaulting on the financing
facilities is remote.
TRADEWINDS PLANTATION BERHAD
Annual Report 2010
203