Management’s Discussion and Analysis Dollar amounts are in thousands of Canadian dollars (except as noted) IPUC is also valued at fair value, except if such values cannot be reliably determined. In the case when a fair value cannot be reliably determined,  such property is recorded at cost. The fair value of IPUC is determined using the capitalization of net income method. The determination of the fair value of investment property requires the use of estimates such as future cash flows from assets and cap‑rates  applicable to those assets. In addition, development risks (such as construction and leasing risks) are also taken into consideration when  determining the fair value of IPUC. These estimates are based on local market conditions existing at the reporting date. In arriving at their  estimates of market values, the external valuator uses their market knowledge and professional judgment and does not rely solely on historical  transaction comparables. The critical estimates and assumptions underlying the valuation of investment properties and developments are set  out in note 5. Where the fair value of financial assets and financial liabilities recorded in the Notes to the Consolidated Financial Statements cannot be derived  from active markets, they are determined using valuation techniques, including the discounted cash flow model. Inputs to these models are  taken from observable markets where possible, but where this is not feasible a degree of judgment is required in establishing fair values. The  judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect  the reported fair value of financial instruments. The accounting policies applied during the year ended December 31, 2013, are consistent with those used in the audited consolidated financial  statements for the year ended December 31, 2012, except for the following new and amended IFRS and International Financial Reporting  Interpretations Committee (“IFRIC”) interpretations which were effective for periods beginning on or after July 1, 2012, and January 1, 2013: IAS 1 ‑ Financial Statement Presentation (“IAS 1”) — Presentation of Items of Other Comprehensive Income (“OCI”) The amendments to IAS 1 change the grouping of items presented in OCI. Items that could be reclassified (or recycled) to profit or loss at a future  point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. The  adoption of this standard did not have an impact on the Company’s financial position or performance. IFRS 10 replaces the portion of IAS 27 ‑ Consolidated and Separate Financial Statements (“IAS 27”) that addresses the accounting for consolidated  financial statements. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes  introduced by IFRS 10 require Management to exercise significant judgment to determine which entities are controlled, and therefore, are  required to be consolidated by a parent, compared with the requirements that were in IAS 27. The adoption of this standard did not have an  impact on the Company’s financial position or performance. IFRS 10 ‑ Consolidated Financial Statements (“IFRS 10”) IFRS 11 ‑ Joint Arrangements (“IFRS 11”) IFRS 11 replaces IAS 31 ‑ Interests in Joint Ventures and SIC 13 ‑ Jointly controlled Entities — Non monetary Contributions by Venturers. IFRS  11 removes the option to account for jointly controlled entities using proportionate consolidation. Instead, joint arrangements that meet the  definition of a joint venture must be accounted for using the equity method. Otherwise joint arrangements are classified as joint operations and  are accounted for by recognizing the Company’s share of the arrangement’s assets and liabilities. The adoption of this standard did not have  an impact on the Company’s accounting treatment of its joint arrangements as they meet the definition of joint ventures and were previously  accounted for using the equity method.  IFRS 12 ‑ Disclosure of Interest in Other Entities (“IFRS 12”) IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures  that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates  and structured entities. A number of new disclosures are also required, including: The Company adopted this standard and included the required disclosures related to the Company’s interest in subsidiaries, joint arrangements  and associates in the notes of these consolidated financial statements. IFRS 13 ‑ Fair Value Measurement (“IFRS 13”) IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required  to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The Company  adopted the standard and concluded that the definition of fair value applied in IFRS 13 does not differ materially from the Company’s current  definition and therefore there was no impact on the Company’s financial position. However, IFRS 13 does expand the disclosure requirements in  respect of fair value measurement, and these additional disclosures are included in Note 5 of these consolidated financial statements. • A requirement to disclose judgments made in determining if the Company controls, has joint control, or significant influence over an entity; and • A requirement to disclose judgments made in determining the type of joint arrangement in which the Company has an interest. 62  Killam ProPerties inc | 2013 Changes in Accounting Policies Fair Value of Financial Instruments