Notes to the Consolidated Financial Statements Dollar amounts are in thousands of Canadian dollars (except share and per share amounts) The Company is subject to income and capital gains taxes in numerous jurisdictions. Significant judgment is required to determine the total  provision for current and deferred taxes. There are many transactions and calculations for which the ultimate tax determination and timing  of payment is uncertain. The Company recognizes liabilities for current taxes based on estimates of whether additional taxes will be due.  Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the  income and deferred tax provisions in the period in which the determination is made. Deferred tax assets and liabilities are recognized on a  net basis to the extent they are relating to the same fiscal entity and fall due in approximately the same period. The Company has determined that it controls and consolidates the subsidiaries where it owns a majority of the shares. The Company is  part owner of one property in which it has a 47% interest. the company has determined that it does control this property as it operates  and manages the property, governs the financial and operating policies, and has the power to cast the majority of the votes at meetings  of the board of directors given the widely held distribution of the remaining ownership percentage. This property is accounted for on a  consolidated basis. the company is part owner of an investment in which it has a 25% ownership interest. the company has determined that it does not  have control as it holds less than a 50% ownership interest. This investment is a joint arrangement which is separately incorporated. It  is deemed that the joint arrangement is separate from the Company, having no direct interest in the assets and obligation of the joint  arrangement. The Company has (after considering the structure and form of the arrangement, the terms agreed by the parties in the  contractual arrangement and the Company’s rights and obligations arising from the arrangement) classified its interest as a joint venture  under IFRS 11. As a consequence it accounts for its investment in the joint venture using the equity method. The fair value of investment property is partially determined by independent real estate valuation experts (the “External Valuator”)  using recognized valuation techniques and partially by Management. The External Valuator uses the capitalization of net income method  to determine the fair market value. In some cases, the fair values are corroborated by recent real estate transactions with similar  characteristics and location to those of the Company’s assets. Management’s internal valuation model is also based on a capitalization of  normalized net operating income (“NOI”) by property, using property specific quarterly capitalization rates (“cap‑rates”), provided by an  independent qualified valuation professional. 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: 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. IAS 1 ‑ Financial Statement Presentation (“IAS 1”) — Presentation of Items of Other Comprehensive Income (“OCI”) Changes in Accounting Policies Fair Value of Financial Instruments Estimates Valuation of Investment Properties Consolidation and joint arrangements 3. Significant Accounting Judgments, Estimates and Assumptions (continued) Taxes 76  Killam ProPerties inc | 2013