Financial Statements 2017
Toowoomba Regional Council
Notes to the Financial Statements
for the year ended 30 June 2017
Note 13. Fair Value Measurements (continued)
(3) Valuation techniques used to derive Level 2 and Level 3 Fair Values (continued)
Buildings - Residential and Specialised Buildings (Levels 2 & 3) (continued)
The main Level 3 inputs used are derived and evaluated as follows:
Relationship between asset consumption rating scale and the level of consumed service potential – Under the cost
approach the estimated cost to replace the asset is calculated and then adjusted to take account of an accumulated
depreciation. Replacement cost is determined by actual construction or purchase prices for recent projects,
Registered Valuers' database, Rawlinson's Construction Guide or similar guides, benchmarking against other
valuations, development of costs using Registered Valuers' models for specific asset types.
Adjustment for accumulated depreciation is achieved by the valuer determining an asset consumption rating scale for
each asset type based on the interrelationship between a range of factors. These factors and their relationship to the
fair value require professional judgment and include asset condition, legal and commercial obsolescence and the
determination of key depreciation related assumptions such as residual value, useful life and pattern of consumption
of the future economic benefit. The consumption rating scales were based initially on the past experience of the
valuation firm and industry guides and were then updated to take into account the experience and understanding of
Council’s own engineers, asset management and finance staff. The results of the valuation were further evaluated by
confirmation against Council’s own understanding of the assets and the level of remaining service potential.
Roads
Current Replacement Cost
The last full valuation of Council's road network was last determined by independent, external Registered Valuers
as at 30 June 2015. The valuation as at 30 June 2015 was determined using the cost approach.
Council applied an indexation rate of 3.0% to the previously determined fair value to determine fair value as at
30 June 2017. This indexation rate was also provided by an independent, registered valuer. A full valuation of Council's
road network is planned for the 2017/18 financial year.
Cost Approach - Depreciated Replacement Cost - Level 3 valuation inputs
Under the cost approach the estimated replacement cost of the network is determined by compo