PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2016 and for the Year Then Ended
Figures in tables are expressed in billions of Rupiah, unless otherwise stated
29
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued u. Financial instruments continued
i. Financial assets continued
d. Available-for-sale financial assets Available-for-sale investments are non-derivative financial assets that are intended to be
held for indefinite periods 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 investments or financial assets at fair value through profit or loss. Available- for-sale financial assets primaly consist of mutual funds, and corporate and government
bonds, which are recorded as
part of “Other Current Financial Assets” in the consolidated statements of financial position.
Available-for-sale securities are stated at fair value. Unrealized holding gain or losses on available-for-sale securities are excluded from income of the current period and are
reported as a separate component in the equity section of the consolidated statement of financial position until realized. Realized gain or losses from the sale of available-for-sale
securities are recognized in the consolidated statements of profit or loss and other comprehensive income, and are determined on the specific identification basis.
ii. Financial liabilities The Group classifies its financial liabilities as i financial liabilities at fair value through profit or
loss or ii financial liabilities measured at amortized cost. The Group’s financial liabilities include trade and other payables, accrued expenses and
interest-bearing loans and other borrowings, and other liabilities. Interest-bearing loans and other borrowings consist of short-term bank loans, two-step loans, bonds and notes, long-term
bank loans and obligations under finance leases.
a. Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss are financial liabilities classified as held
for trading. A financial liability is classified as held for trading if it is incurred principally for the purpose of selling or repurchasing it in the near term and for which there is evidence of
a recent actual pattern of short-term profit taking.
No financial liabilities were categorized as held for trading as of December 31, 2016 and 2015.
b. Financial liabilities measured at amortized cost Financial liabilities that are not classified as liabilities at fair value through profit or loss fall
into this category and are measured at amortized cost. Financial liabilities measured at amortized cost are trade and other payables, accrued expenses, and interest-bearing loans
and other borrowings, and other liabilities. Interest-bearing loans and other borrowings consist of short-term bank loans, two-step loans, bonds and notes, long-term bank loans
and obligations under finance leases.
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2016 and for the Year Then Ended
Figures in tables are expressed in billions of Rupiah, unless otherwise stated
30
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued u. Financial instruments continued
iii. Offsetting financial instruments Financial assets and liabilities are offset and the net amount is reported in the consolidated
statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle them on a net basis, or realize the assets and settle
the liabilities simultaneously. The right of set-off must not be contingent on a future event and must be legally enforceable in all of the following circumstances:
a. the normal course of business; b. the event of default; and
c. the event of insolvency or bankruptcy of the Group and all of the counterparties. iv. Fair value of financial instruments
Fair value is the amount for which an asset could be exchanged, or liability settled, in an arms’ length transaction.
The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices, without any deduction for transaction costs.
For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include
using recent arm’s length market transactions, reference to the current fair value of another instrument that is substantially
the same, a discounted cash flow analysis or other valuation models. An analysis of fair values of financial instruments and further details as to how they are
measured are provided in Note 37. v. Impairment of financial assets
The Group assesses the impairment of financial assets if there is objective evidence that a loss event has a negative impact on the estimated future cash flows of the financial assets.
Impairment is recognized when the loss event can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognized.
For financial assets carried at amortized cost, the Group first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial
assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it
includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment
and for which an impairment loss is, or continues to be, recognized are not included in the collective assessment of impairment.
The amount of any impairment loss identified is measured as the difference between
the asset’s carrying amount and the present value of estimated future cash flows excluding future expected credit losses that have not yet been incurred. The present value of the
estimated future cash flows is discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the
loss is recognized in profit or loss.
