Notes to the Financial Statements for the year ended 30 June 2016
Note 13 . Fair Value Measurements ( continued )
( 3 ) Valuation techniques used to derive Level 2 and Level 3 Fair Values
Where Council is unable to derive Fair Valuations using quoted market prices of identical assets ( i . e . Level 1 inputs ) Council instead utilises a spread of both observable inputs ( Level 2 inputs ) and unobservable inputs ( Level 3 inputs ).
The Fair Valuation techniques Council has employed while utilising Level 2 and Level 3 inputs are as follows :
Financial Assets
Equity Investment - South Burnett Community Enterprises Limited ( Level 2 ) ( formerly known as Yarraman Financial Services ) Fair value was derived by reference to Level 2 market based evidence . The share price as at 30 June 2016 published by the National Stock Exchange of Australia was used . These shares are not actively traded .
Infrastructure , Property , Plant and Equipment
Land ( Level 2 ) Land fair values were determined by independent , external Registered Valuers as at 30 June 2015 . Fair value was derived by reference to Level 2 market based evidence including observable historical sales data for properties of similar nature and specification with the Toowoomba Regional Council and surrounding areas .
Buildings - Residential and Specialised Buildings ( Levels 2 & 3 ) The fair value of buildings ( excluding Water and Wastewater buildings ) were determined by independent , external Registered Valuers as at 1 July 2014 . Disclosures relating to Water and Wastewater buildings are included in this note under the headings Water and Wastewater - Active Assets .
Market approach ( direct comparison approach ) - Level 2 valuation inputs Level 2 inputs were used to determine the fair value of a range of properties . This included the bulk of residential and commercial properties . The residential properties fair value has been derived from sales prices of comparable properties after adjusting for differences in key attributes such as property size . The most significant inputs into this valuation approach are price per square metre .
Cost Approach - Depreciated Replacement Cost - Level 3 valuation inputs Specialised buildings were valued using the cost approach using professionally qualified external Registered Valuers . The approach estimated the replacement cost for each building by componentising the buildings into significant parts with different useful lives and taking into account a range of factors . While the unit rates based on square metres could be supported from market evidence ( Level 2 ) other inputs ( such as estimates of residual value , useful life , pattern of consumption and asset condition ) required extensive professional judgement and impacted significantly on the final determination of fair value . As such these assets were classified as having been valued using Level 3 valuation inputs .
164 CHAPTER 6 Financial report TOOWOOMBA REGIONAL COUNCIL Annual Report 2015 - 2016