Manulife US REIT - Annual Report 2021

MANULIFE US REIT 152 For the year ended 31 December 2021 Notes to the Financial Statements 2 BASIS OF PREPARATION 2.1 Statement of compliance The financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”), the applicable requirements of the Code on Collective Investment Schemes (the “CIS Code”) issued by the Monetary Authority of Singapore (“MAS”) and the provisions of the Trust Deed. 2.2 Basis of measurement The financial statements have been prepared on the historical cost basis except as otherwise disclosed in the accounting policies below. 2.3 Functional and presentation currency The financial statements are presented in United States Dollars (“US$” or “USD”), which is the functional currency of the Trust. All financial information presented has been rounded to the nearest thousand (US$’000), unless otherwise stated. 2.4 Use of estimates and judgements The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Information about critical judgements and accounting estimates in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is described in the following notes: • Note 5 – Measurement of expected credit losses (“ECLs”) for trade receivables • Note 6 – Valuation of investment properties • Note 10 – Fair value of derivatives Measurement of fair values A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Group uses third party appraisal firms and financial institutions to perform valuations. The Manager assesses and documents the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified. When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: • Level 1: for unadjusted prices quoted in active markets for identical assets or liabilities; • Level 2: for inputs, other than quoted prices included in Level 1, that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and