PSH-Annual-Report

Annual Report December 31, 2014Notes to Financial Statements (continued)3. SIGNIFICANT ACCOUNTINGJUDGMENTS, ESTIMATES ANDASSUMPTIONS (continued)The Company, therefore, has concluded that PS Vand PSF1 are structured entities.Estimates and AssumptionsThe key assumptions concerning the future andother key sources of estimation uncertainty at thereporting date that have a significant risk ofcausing a material adjustment to the carryingamounts of assets and liabilities within the nextfinancial year are discussed below. The Companybased its assumptions and estimates onparameters available when the financialstatements were prepared. Existing circumstancesand assumptions about future developments maychange due to market changes or circumstancesarising beyond the control of the Company. Suchchanges are reflected in the assumptions whenthey occur.Fair Value of Financial Instruments4. NEW STANDARDS, INTERPRETATIONS AND AMENDMENTSWhen the fair value of financial assets andfinancial liabilities recorded in the statement offinancial position cannot be derived from activemarkets, their fair value is determined by theInvestment Manager using prices obtained fromcounterparties or independent third-party valuationagents. The independent third-party valuationagents utilize proprietary models to determine fairvalue. The valuation agents’ modeling mayconsider, but is not limited to, the following inputs:amount and timing of cash flows, current andprojected financial performance, volatility of theunderlying securities’ stock prices, dividend yieldsand/or interest rates. Changes in assumptionsabout these factors could affect the reported fairvalue of financial instruments in the statement offinancial position and the level where theinstruments are disclosed in the fair valuehierarchy. The models are calibrated regularly andtested for validity using prices from observablecurrent market transactions in the same instrument(without modification or repackaging) or based onavailable observable market data.The following relevant standards, which have been issued by the IASB, have an effective date after thedate of these financial statements:InternationalAccountingStandards(IAS/IFRS) Description Effective DateIFRS 7Financial Instruments: Disclosures – deferral of mandatoryeffective date of IFRS 9 and amendments to transitiondisclosures January 1, 2015Annual Improvement Cycle 2010 – 2012 January 1, 2015Annual Improvement Cycle 2011 – 2013 January 1, 2015Annual Improvement Cycle 2012 – 2014 January 1, 2016IFRS 9 Financial Instruments January 1, 2018IFRS 15 Revenue from Contracts with Customers January 1, 2017The Directors have chosen not to early adopt theabove standards and amendments and otherstandards issued by the IASB which have aneffective date after the date of these financialstatements. The Directors do not anticipate thatthese standards and amendments would have animpact on the Company’s financial statements inthe period of initial application, with the exceptionof IFRS 9. However, a full assessment of thestandards and amendments has not yet beenperformed.Several other new standards and amendmentsapply for the first time in 2014. However, they donot impact the financial statements of theCompany.Offsetting Financial Assets and Financial Liabilities– Amendments to IAS 32These amendments clarify the meaning of“currently has a legally enforceable right to set-off”and the criteria for non-simultaneous settlementmechanisms of clearing houses to qualify foroffsetting. These amendments have no impact tothe Company.50 PERSHING SQUARE HOLDINGS, LTD.