Deferred charges-land rights SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued m. Leases continued

PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of September 30, 2014 and for the Nine months Period Then Ended unaudited Figures in tables are expressed in billions of rupiah, unless otherwise stated 31 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued r. Revenue and expense recognition continued vi. Other telecommunications service revenues Revenues from other telecommunications services consist of Revenue-Sharing Arrangements “RSA” and sales of other telecommunication services or goods. The RSA are recorded in a manner similar to capital leases where the property and equipment and obligation under RSA are reflected in the consolidated statement of financial position. All revenues generated from the RSA are recorded as a component of revenues, while a portion of the investors’ share of the revenues from the RSA is recorded as finance costs with the balance treated as a reduction of the obligation under RSA. Universal Service Obligation “USO” compensation from construction activities to design, build and finance assets for the grantor is recognized on the stage of completion basis. Revenues from operating and maintenance activities in respect of the assets under the concession are recognized when the services are rendered. In concession contract under USO, the Company and subsidiaries have contractual rights to receive considerations from the grantor. The Company and subsidiaries recognize a financial asset in their consolidated statement of financial position, in consideration for the services they provide designing, building, operation or maintenance of assets under concession. Such financial assets are recognized in the consolidated statement of financial position as Accounts Receivable, for the amount of fair value of the infrastructure on initial recognition and subsequently at amortized cost. The receivable is settled by means of the grantor’s payments received. The financial income calculated on the basis of the effective interest rate is recognized as finance income. Revenues from sales of other telecommunication services or goods are recognized upon completion of services and or delivery of goods to customers. vii. Multiple-element arrangements Where two or more revenue-generating activities or deliverables are sold under a single arrangement, each deliverable that is considered to be a separate unit of accounting is accounted for separately. The total revenue is allocated to each separately identifiable component based on the relative fair value of each component and the appropriate revenue recognition criteria are applied to each component as described above. viii. Agency relationship Revenues from an agency relationship are recorded based on the gross amount billed to the customers when the Company and subsidiaries act as principal in the sale of goods and services. Revenues are recorded based on the net amount retained the amount paid by the customer less amount paid to the suppliers because in substance, the Company and subsidiaries act as agents and earned commission from the suppliers of the goods and services sold. ix. Customer loyalty programme The Company and subsidiaries operate a loyalty point programme, which allows customers to accumulate points for every certain multiple of the usage of telecommunication services. The points can then be redeemed in the future for free or discounted products, provided other qualifying conditions are achieved.