NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2023 2 BASIS OF PREPARATION (continued) 2.4 Use of estimates and judgements (continued) When measuring the fair value of an asset or a liability, the CapitaLand Ascott REIT Group, the CapitaLand Ascott BT Group and the Stapled Group use observable market 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 : quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2 : inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). • Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement (with Level 3 being the lowest). The CapitaLand Ascott REIT Group, the CapitaLand Ascott BT Group and the Stapled Group recognise transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred. Further information about the assumptions made in measuring fair values is included in Note 33 – financial instruments. 2.5 Adoption of new accounting standards and amendments The CapitaLand Ascott REIT Group, the CapitaLand Ascott BT Group and the Stapled Group have applied the following FRSs or SFRS(I)s, amendments to and interpretations of FRSs/SFRS(I)s for the first time for the annual period beginning on 1 January 2023: • SFRS(I) 17/FRS 117: Insurance Contracts • Amendments to SFRS(I) 1-12/FRS 12: Deferred tax related to Assets and Liabilities arising from a Single Transaction • Amendments to SFRS(I)1-12/FRS 12: International Tax Reform – Pillar Two Model Rules • Amendments to SFRS(I) 1-1/FRS 1 and FRS Practice Statement 2: Disclosure of Accounting Policies • Amendments to SFRS(I)1-8/FRS 8: Definition of Accounting Estimates Other than the below, the application of these amendments to accounting standards and interpretations does not have a material effect on the financial statements. Global minimum top-up tax The Stapled Group has adopted Amendments to SFRS(I) 1- 12/FRS 12: International Tax Reform - Pillar Two Model Rules upon their release on 23 May 2023. The amendments provide a temporary mandatory exception from deferred tax accounting for the top-up tax that may arise from the jurisdictional adoption of the Pillar Two model rules published by OECD, and required new disclosures about the Pillar Two tax exposure. The mandatory exception is effective immediately and applies retrospectively. However, because no new legislation to implement top-up tax was enacted or substantively enacted at 31 December 2022 in any jurisdiction in which the Stapled Group operates and no related deferred tax was recognised as that date, the retrospective application has no impact on the Stapled Group's consolidated financial statements. 200 CAPITALAND ASCOTT TRUST
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