CG malls europe - Commerz Real

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Commerz Real Estate Master FCP – SIF
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT DECEMBER 31, 2009
4.1. Critical accounting estimates and assumptions (continued)
The preparation of the consolidated financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue, expenses and unrealized gains or losses during the reporting
period. Actual results could differ from these estimates. The significant accounting estimates for the Fund are described
below:
(a) Fair value of investment properties
The fair value of investment property is the price at which the property could be exchanged between knowledgeable,
willing parties in an arm’s length transaction. The fair value is determined without any deduction for transaction costs
it may occur on sale or other disposal.
The best estimate of fair value is current prices in an active market for similar lease and other contracts. In the absence
of such information, the Group determines the amount within a range of reasonable fair value estimates and assumptions
based on market conditions existing at each balance sheet date.
The fair values of the properties are determined by the discounted cash flow method over a ten year period. The calculated
amount is, amongst other factors, crucially dependant on assumptions on key factors concerning the net operating
income, such as assumptions on general vacancy, collection losses, or on repair and maintenance costs as well as on
general assumptions on the discount rate. Assumptions on these parameters differ significantly depending on jurisdiction,
location or general state of condition of the specific property. Modifications in assumptions on any of these factors
may lead to significant changes in the estimated market values.
The Fund reviews and where appropriate challenges the fair market valuations provided by the independent valuers.
In doing so, the Fund Managers use their knowledge and understanding of current prevailing market conditions and
transactional activity obtained from a variety of other external sources.
(b) Income taxes
The Group is subject to income taxes in different jurisdictions. Significant estimates are required in determining the
provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is
uncertain. The Group recognises liabilities that may arise from anticipated tax audits based on estimates of whether
additional taxes will be due. Where the final tax outcome from these matters is different from the amounts that were
initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such
determination is made.
4.2. Critical judgements in applying the Group’s accounting policies
The Group did not make any critical accounting judgements in 2009 or 2008.