Annual Report 2015-16

Financial Statements 2016

Noosa Shire Council

Notes to the Financial Statements
 for the year ended 30 June 2016

Note 12. Fair Value Measurements (continued)

Buildings (Level 3)
For the majority of Council's buildings, there is no active market due to the specialised nature of the assets and the
services they provide. The fair value of buildings were independently valued by registered valuers Australia Pacific
Valuers, effeclive 30 June 2015.
Due to the predominately specialised nature of local government buildings, the valuations have been undertaken using a
cost approach. This is deemed to be a level 3 input.

Under this approach the cost to replace the asset is calculated and then adjusted to take account of accumulated
depreciation. The valuer disaggregated the building into different components and for each component determined a
value based on the interrelationship between a range of factors. These include asset condition, legal and commercial
obsolescence and the determination of key depreciation related assumptions such as pattern of consumption and future
economic benefit.

Inputs to the valuation include the design and construction, average cost of construction, condition and consumption
score for each component. As these are supported by observable evidence obtained via inspection and market evidence
they have been classified as a Level 2 inputs. The unobservable inputs (such as estimates pattern of consumption and
(based on the asset consumption score) its relationship to the assessed level of remaining service potential of the
depreciable amount, required extensive professional judgement and impacted significantly on the final determination of
fair value. As such these assets were classified as having been valued using level 3 valuation inputs.

The consumption rating scales were based initially on the past experience of the valuation firm and industry guides and
were then updated to take into account the experience and understanding of Noosa Shire Council's own engineers, asset
management and finance staff. The results of the valuation were further evaluated by confirmation against Noosa Shire
Council's own understanding of the assets and the level of remaining service potential.

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