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GHL Systems Berhad
(293040-D)
Annual report 2015
Notes to the Financial Statements
31 December 2015 (continued)
6.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
6.3 Key sources of estimation uncertainty (continued)
(h) Executives’ share scheme
The Group measures the cost of equity-settled transactions with employees by reference to the
fair value of the employee share options at the date at which they are granted. Judgement is
required in determining the most appropriate valuation model for the share options granted,
depending on the terms and conditions of the grant. The Group is also required to use
judgement in determining the most appropriate inputs to the valuation model including volatility
and dividend yield. The assumptions and model used are disclosed in Note 32 to the financial
statements.
(i) Fair values of borrowings
The fair values of borrowings are estimated by discounting future contractual cash flows at the
current market interest rates available to the Group for similar financial instruments. Sensitivity
analysis of the effects of interest rate risk has been disclosed in Note 36 to the financial statements.
(j) Fair value measurement
The financial and non-financial assets and liabilities that are measured subsequent to initial
recognition at fair value are grouped into Level 1 to Level 3 based on the degree to which the
fair value inputs are observable.
(i) Level 1 fair value measurements are those derived from quoted prices (unadjusted in active
markets for identical assets or liabilities;
(ii) Level 2 fair value measurements are those derived from inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices); and
(iii) Level 3 fair value measurements are those derived from inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
The classification of an item into the above levels is based on the lowest level of the inputs used
in the fair value measurement of the item. Transfers of items between levels are recognised in the
period they occur.
The Group measures financial instruments at fair value, as disclosed in Note 35 to the financial
statements.