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
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 2017 published by
the National Stock Exchange of Australia was used. These shares are not actively traded.
Infrastructure, Property, Plant and Equipment
Land (Level 2)
The last full valuation of land fair values were last 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. Council applied an indexation rate of 4.4% 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 land
assets is planned in the 2017/18 financial year.
Buildings - Residential and Specialised Buildings (Levels 2 & 3)
The fair value of buildings (excluding Water and Wastewater buildings) was determined by independent, external
Registered Valuers as at 30 June 2017. 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.
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TOOWOOMBA REGIONAL COUNCIL I Annual Report 2016 - 2017