PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2007 and 2006 Expressed in millions of Rupiah, unless otherwise stated
133
58. GOVERNMENT GUARANTEE OF OBLIGATIONS OF LOCALLY INCORPORATED BANKS continued
Based on the Lembaga Penjaminan Simpanan Regulation No. 1PLPS2006 dated March 9, 2006 regarding the Deposit Guarantee Program, the amounts guaranteed for each of the customer in one bank
is a maximum of Rp100 million.
59. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE BANK “INDONESIAN GAAP” AND INTERNATIONAL FINANCIAL REPORTING STANDARDS
“IFRS” The accompanying consolidated financial statements have been prepared in accordance with Indonesian
GAAP, which varies in certain significant respects from IFRS. The significant differences relate to the items in the following paragraphs:
a. Allowance for Possible Losses on Earning Assets Under Indonesian GAAP, the Bank records allowances for possible losses on earning assets using
general and specific allowances based on management’s estimates and using the guidelines prescribed by Bank Indonesia BI.
Under IAS No. 39 - “Financial Instruments: Recognition and Measurement”, the Bank calculates allowances for possible losses on earning assets based on the difference between the carrying
amount of the impaired earning asset and the net present value of expected future cash flows discounted at the earning assets original effective interest rate. An earning asset is considered
impaired when it becomes probable that the Bank will be unable to collect all amounts due according to contractual terms. In addition, the Bank also recognizes allowances for possible losses on
unimpaired loans in accordance with BI minimum provision.
b. Allowance for Possible Losses on Commitments and Contingencies Under Indonesian GAAP, the Bank records allowances for possible losses on commitments and
contingencies using general and specific allowances based on management’s estimates and using the guidelines prescribed by BI.
Under IFRS, the Bank recognizes certain of the allowances for possible losses on commitments and contingencies in accordance with the provisions of IAS No. 37 - “Estimated Liabilities, Contingent
Liabilities and Contingent Assets”. In accordance with IAS No. 37 - “Estimated Liabilities, Contingent Liabilities and Contingent Assets” the allowances for possible losses on commitments and
contingencies is recognized only a the Company has current liabilities both legally and constructively resulting from past event; b it is probable the settlement of the liabilities resulting in
the resources outflow; and c reliable estimate can be made on the amount of the liabilities.
c. Loans Purchased from IBRA Under Indonesian GAAP, the difference between the outstanding loan principal and purchase price is
booked as deferred income if the Bank enters into a new credit agreement with the borrower, and as an allowance for possible losses if the Bank does not enter into a new credit agreement with the
borrower. The allowance for loan losses or deferred income is only adjusted once the Bank has recovered the original purchase price.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2007 and 2006 Expressed in millions of Rupiah, unless otherwise stated
134
59. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE BANK “INDONESIAN GAAP” AND INTERNATIONAL FINANCIAL REPORTING STANDARDS
“IFRS” continued c. Loans Purchased from IBRA continued
Under IFRS, the difference between outstanding loan principal and purchase price is booked as deferred income for all loans purchased from IBRA. For performing loans, the deferred income is
accreted into income over the life of the loan using the effective interest rate method in accordance with IAS No. 39 - “Financial Instruments: Recognition and Measurement”. For non-performing loans,
the deferred income is only adjusted once the Bank has recovered the original purchase price.
d. Premises and Equipment Under Indonesian GAAP, premises and equipment are stated at cost, except for certain premises and
equipment used in operations that were revalued in 1979, 1987 and 2003 in accordance with Government regulations, less accumulated depreciation and amortization.
In accordance with IAS 16 - “Property, Plant and Equipment”, company could choose cost method or revaluation method as the accounting policy for fixed assets and has to implement the policy to all fixed
assets. In the cost method, after recognition of assets, an assets is carried at its cost less any accumulated depreciation and accumulated impairment, if any. In the revaluation method, after
recognition of assets, a fixed assets that has a reliable fair value could be reported at the revalued amount, that is the fair value on the revaluation date less any accumulated depreciation and
accumulated impairment, if any. The revaluation should be sufficient regularity to ensure book value does not materially different with the fair value on the balance sheet date.
For IFRS, the Bank has chosen to adopt cost method on all fixed assets, and therefore, presented the fixed assets at cost less any accumulated depreciation, and did not include the revaluation value,
because of IAS 16 requirement for sufficient regularity on fixed assets revaluation.
e. Land Rights Under Indonesian GAAP, the costs of acquired land-rights including incidental costs are capitalized. It
also provides that the main acquisition costs of land-rights are generally not subject to amortization. However, the incidental costs incurred in connection with the acquisition of the land-rights or renewal or
extension of the legal titles should be deferred and presented separately from the main acquisition costs, and amortized over the period of the land-use rights or the land-rights estimated useful lives,
whichever is shorter.
Under IFRS, if the title of land is not expected to pass to the lessee by the end of the lease term, the lessee normally does not receive substantially all of the risks and rewards incidental to ownership, in
which case the lease of land will be classified as an operating lease. A payment made on entering into or acquiring a leasehold that is accounted for as an operating lease represents prepaid lease payments
that are amortized over the lease term in accordance with the pattern of benefits provided.
f. Deferred Income Taxes The impact on deferred income taxes of the IFRS adjustments has been recognized in accordance with
IAS 12 - “Income Taxes”. An effective tax rate of 30 has been applied.
