PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2013 AND 2012
Expressed in millions of Rupiah, unless otherwise stated
Appendix 515 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
b. Changes in accounting policies continued
b.ii. SFAS 38 - Entities Under Common Control Business combination transaction amongst entities under common control, in form of transfer of
business conducted for the purpose of reorganisation of entities under common control, does not represent a change of ownership in terms of economic substance, therefore, there shall be
no gain or loss recognised by the group as a whole and by individual entities within the group. Since the business combination transaction amongst entities under common control does not
cause a change in economic substance of ownership of the transferred business, therefore the transaction is recognised at book value using the pooling interest method.
The entity that accepts or releases a business in a combination or separation of business amongst entities under common control, shall recognise the difference between benefits being
transferred or received and the recorded amount of every business combination transaction as equity and present it under additional paid-in capitalagio.
b.iii. Unearned Premium Reserves UPR Since 1 January 2013, t
he Bank’s subsidiary AXA Mandiri Financial Services change its accounting policy in calculating unearned premium reserve from aggregate method at a
minimum 40 of net premiums into daily basis method. The impact of changes in accounting policy is not significant
to the Group’s consolidated financial statements, therefore it is charged to current year statement of comprehensive income, and the consolidated financial statements
for the year ended 31 December 2012 were not restated.
c. Financial instruments A. Financial assets
The Group classifies its financial assets in the following categories of a financial assets at fair value through profit and loss, b loans and receivables, c held-to-maturity financial assets, and
d available-for-sale financial assets. The classification depends on the purpose for which the financials assets were acquired. Management determines the classification of its financial
assets at initial recognition.
a Financial assets at fair value through profit or loss This category comprises two sub-categories: financial assets classified as held for trading,
and financial assets designated by the Group as at fair value through profit or loss upon initial recognition.
A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term or if it is part of a portfolio of identified
financial instruments that are managed together and for which there is evidence of a recent actual pattern of short term profit-taking. Derivatives are also categorised as held for trading
unless they are designated and effective as hedging instruments.
A financial asset designated as fair value through profit or loss at inception are held to back the insurance liabilities of Subsidiary measured at fair value of the underlying assets.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2013 AND 2012
Expressed in millions of Rupiah, unless otherwise stated
Appendix 516 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
c. Financial instruments continued A. Financial assets continued
a Financial assets at fair value through profit or loss continued
Financial instruments included in this category are recognised initially at fair value; transaction costs are taken directly to the consolidated statement of income. Gains and
losses arising from changes in fair value and sales of these financial instruments are included directly in the consolidated statement of comprehensive income and are reported
respectively as “Unrealised gainslosses from increasedecrease in fair value of financial instruments” and “Gainslosses from sale of financial instruments”. Interest income on
financial instruments held for trading are included in “Interest income”. b Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than:
- those that the Group intends to sell immediately or in the short term, which are classified as held for trading, and those that the Group upon initial recognition designates as at fair
value through profit or loss; - those that the Group upon initial recognition designates as available for sale; or
- those for which the Group may not recover substantially all of its initial investment, other than because of loans and receivables deterioration.
Loans and receivables are initially recognised at fair value plus transaction costs and subsequently measured at amortised cost using the effective interest rate method. Income
on financial assets classified as loans and receivables is included in the consolidated statement
of income and is reported as “Interest income”. In the case of impairment, the impairment loss is reported as a deduction from the carrying value of the financial assets
classified as loan and receivables and recognised in the consolidated statement of income as “Allowance for impairment losses”.
c Held-to-maturity financial assets Held-to-maturity financial assets are non-derivative financial assets with fixed or
determinable payments and fixed maturities that the Group has the positive intention and ability to hold to maturity, other than:
- those that the Group upon initial recognition designates as at fair value through profit or loss;
- those that the Group designates as available for sale; and - those that meet the definition of loans and receivables.
Held-to-maturity financial assets are initially recognised at fair value including transaction costs and subsequently measured at amortised cost, using the effective interest method.
Interest income on held-to-maturity financial assets is included in the consolidated
statement of income and reported as “Interest income”. In the case of impairment, the impairment loss is reported as a deduction from the carrying value of the investment and
recognised in the consolidated f inancial statements as “Allowance for impairment losses”.
d Available-for-sale financial assets Available-for-sale are financial assets that are intended to be held for indefinite period of
time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or that are not classified as loans and receivables, held-to-maturity or
financial assets at fair value through profit or loss.
