EXCEL FORCE MSC BERHAD Annual Report 2018

117 ANNUAL REPORT 2018 32. Financial Instruments (cont’d) (c) Fair value of financial instruments (cont’d) (ii) Fair value hierarchy (cont’d) Non-derivative financial instruments Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. Level 3 fair value Level 3 fair values for the financial assets and liabilities are estimated using unobservable inputs. The significant unobservable inputs used in determining the fair value measurement of Level 3 financial instruments as well as the relationship between key unobservable inputs and fair value, is detailed in the table below: Financial instruments Valuation technique used Significant unobservable input Inter-relationship between key unobservable input and fair value Company Financial asset Amount due from a subsidiary company Discounted cash flow method Discount rate 6.60% The higher the discount rate, the lower the fair value of the financial assets would be Notes To The Financial Statements 31 December 2018 (cont’d)