Disclosure and presentation

Fair Value Estimation 
The fair value of publicly traded derivatives and trading and available-for-sale 
securities is based on quoted market prices at the reporting date. The fair value of 
interest rate swaps is calculated as the present value of the estimated future cash 
flows. The fair value of forward foreign exchange contracts is determined using 
forward exchange market rates at the reporting date. 
In assessing the fair value of non-traded derivatives and other financial instruments, 
the entity uses a variety of methods and makes assumptions that are based on market 
conditions existing at each reporting date. Quoted market prices or dealer quotes for 
the specific or similar instruments are used for long-term debt. Other techniques, 
such as option pricing models and estimated discounted value of future cash flows, 
are used to determine fair value for the remaining financial instruments. 
The face values less any estimated credit adjustments for financial assets and 
liabilities with a maturity of less than one year are assumed to approximate their fair 
values. The fair value of financial liabilities for disclosure purposes is estimated by 
discounting the future contractual cash flows at the current market interest rate 
available to the entity for similar financial instruments. 
Note X3. Financial Instruments 
(i) Off-Balance-Sheet Derivative Instruments 
The entity is party to derivative financial instruments in the normal course of its 
operations in order to hedge exposure to fluctuations in interest and foreign exchange 
rates. 
Interest Rate Swap Contracts 
Loans of the entity currently bear an average variable interest rate of 8.5%. It is 
policy to protect part of the loans from exposure to increasing interest rates. 
Accordingly, the entity has entered into interest rate swap contracts under which it is 
obliged to receive interest at variable rates and to pay interest at fixed rates. The 
contracts are settled on a net basis and the net amount receivable or payable at the 
reporting date is included in other debtors or other creditors. 
The contracts require settlement of net interest receivable or payable each 90 days. 
The settlement dates coincide with the dates on which interest is payable on the 
underlying debt. 
Swaps currently in place cover approximately 60% (20X1
40%) of the loan 
principal outstanding and are timed to expire as each loan repayment falls due. The 
fixed interest rates range between 7.8% and 8.3% (20X1
9.0% and 9.6%) and the 

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FINANCIAL INSTRUMENTS: DISCLOSURE AND PRESENTATION 
IPSAS 15 ILLUSTRATIVE EXAMPLES 
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variable rates are between 0.5% and 1.0% above the 90 day bank bill rate which at 
the reporting date was 8.2% (20X1
9.4%). 
At 30 June 20X2, the notional principal amounts and periods of expiry of the interest 
rate swap contracts are as follows: