NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued JUNE 30, 2012 UNAUDITED AND DECEMBER 31, 2011 AUDITED
AND SIX MONTHS PERIOD ENDED JUNE 30, 2012 AND 2011 UNAUDITED Figures in tables are presented in billions of Rupiah, unless otherwise stated
22
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued m. Leases continued
Leased assets are depreciated using the same method with and based on the useful lives as estimated for directly acquired property, plant and equipment. However, if there is no reasonable
certainty that the Company and its subsidiaries will obtain ownership by the end of the lease term, the leased assets are fully depreciated over the shorter of the lease term and their economic
useful lives.
Leasing arrangements that do not meet the above criteria are accounted for as operating leases for which payments are charged as an expense on the straight-line basis over the lease period.
n. Deferred charges for land rights
Costs incurred to process and extend land rights held by the Company and its subsidiaries are deferred and amortized using the straight-line method over the term of the land rights.
o. Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if
payment is due within one year or less or in the normal operating cycle of the business if longer. If not, they are presented as non-current liabilities.
Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest menthod.
p. Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost; any difference between the proceeds net of transaction
costs and the redemption value is recognized in the consolidated statement of comprehensive income over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee
is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity
services and amortized over the period of the facility which it relates.
q. Foreign currency translation The functional currency of the Company and its subsidiaries is the Indonesian Rupiah and the
accounting records of the Company and its subsidiaries are maintained in Indonesian Rupiah. Transactions in foreign currencies are translated into Indonesian Rupiah at the rates of exchange
prevailing at transaction date. At the consolidated statement of financial position date, monetary assets and monetary liabilities balances denominated in foreign currencies are translated into
Indonesian Rupiah based on the buy and sell rates quoted by Reuters prevailing at the consolidated statement of financial position date as follows:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued JUNE 30, 2012 UNAUDITED AND DECEMBER 31, 2011 AUDITED
AND SIX MONTHS PERIOD ENDED JUNE 30, 2012 AND 2011 UNAUDITED Figures in tables are presented in billions of Rupiah, unless otherwise stated
23
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued q. Foreign currency translation continued
The Company and its subsidiaries June 30, 2012 December 31, 2011
Buy Sell
Buy Sell
United States Dollars “US” 1 9,385
9,400 9,060
9,075 Euro 1
11,802 11,824 11,706
11,727 Yen 1
118.04 118.27 116.69
116.96 The resulting foreign exchange gains or losses, realized and unrealized, are credited or charged
to the consolidated statement of comprehensive income of the current period, except for foreign exchange differences incurred on borrowings during the construction of qualifying assets which
are capitalized to the extent that the borrowings can be attributed to the construction of those qualifying assets Note 2l.
r. Revenue and expense recognition
i. Fixed line telephone revenues
Revenues from fixed line installations are deferred including incremental costs and recognized as income over the expected term of the customer relationships. Based on
reviews of historical information and customer trends, the Company determined the expected term of the customer relationships in 2012 and 2011 is 10 years, respectively. Revenues from
usage charges are recognized as customers incur the charges. Monthly subscription charges are recognized as revenues when incurred by subscribers.
ii. Cellular and fixed wireless telephone revenues Revenues from postpaid service, which consist of usage and monthly charges, are
recognized as follows: •
Airtime and charges for value added services are recognized based on usage by subscribers.
• Monthly subscription charges are recognized as revenues when incurred by subscribers.
Revenues from prepaid card subscribers, which consist of the sale of starter packs also known as SIM cards in the case of cellular and RUIM in the case of fixed wireless
telephone and start-up load vouchers and pulse reload vouchers, are recognized as follows:
• Sale of SIM and RUIM cards are recognized as revenue upon delivery of the starter
packs to distributors, dealers or directly to customers. •
Sale of pulse reload vouchers either bundled in starter packs or sold as separate items are recognized initially as unearned income and recognized proportionately as usage
revenue based on duration and total of successful calls made and the value added services used by the subscribers or the expiration of the unused stored value of the
voucher.
• Unutilized promotional credits are netted against unearned income.
Revenues under Universal Service Obligation “USO“ arrangement are recognized when telecommunication access is ready and the services are rendered.
