EXCEL FORCE MSC BERHAD Annual Report 2018

116 ANNUAL REPORT 2018 32. Financial Instruments (cont’d) (c) Fair value of financial instruments (i) Methods and assumptions used to estimate fair value The fair value of financial assets and financial liabilities are determined as follows: Financial instruments not carried at fair value and whose carrying amounts are reasonable approximation of fair value The carrying amount of short-term receivables and payables, cash and bank balances, current portion of amount due from a subsidiary company and short- term loan and borrowing are reasonable approximation of fair value due to the relatively short-term nature of these financial instruments and insignificant impact of discounting. The carrying amount of long-term floating rate loan and borrowing approximates their fair value as the loan will be re-priced to market interest rate on or near reporting date. Financial instruments not carried at fair value and whose carrying amounts are not reasonable approximation of fair value The fair value of non-current portion of amount due from a subsidiary company is estimated by discounting the expected future cash flows at market lending rates for similar types of lending, borrowing or leasing arrangements at the end of the reporting period. At the end of the reporting period, these amounts are carried at amortised costs and the carrying amounts are approximate to their fair values. Financial instruments carried at fair value The fair value of short term funds is determined by reference to the exchange quoted market bid prices at the close of the business at the end of each reporting period. (ii) Fair value hierarchy Policy on transfer between levels The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer. There were no transfers between levels during the current and previous financial years. Level 1 fair value Level 1 fair value is derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair value Level 2 fair value is estimated using 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). Notes To The Financial Statements 31 December 2018 (cont’d)