PT SUMMARECON AGUNG Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2017 and for the Six-Month Periods Then Ended Expressed in thousands of Indonesian Rupiah, unless otherwise stated
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
g. Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by the weighted average method.
Properties acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, are held as inventories.
The cost of land under development consists of cost of undeveloped land, direct and indirect development costs related to real estate development activities and borrowing costs. Land under development is transferred to
landplots available for sale when the land development is completed. Total project cost is allocated proportionately to the saleable landplots based on their respective areas.
The cost of apartment under construction consists of the cost of developed land, construction costs, borrowing costs and other costs related to the development of the apartment. Costs capitalized to apartment under
construction are allocated to each apartment unit using the saleable area method. The cost of land development, including land which is used for roads and infrastructure or other unsaleable area,
is allocated using saleable area. The cost of buildings and apartments under construction is transferred to houses, shops and apartments strata
title available for sale when the construction is substantially completed. For residential property project, its cost is classified as part of inventories upon the commencement of
development and construction of infrastructure. For commercial property project, upon the completion of development and construction of infrastructure, its cost remains as part of inventories or is reclassified to the
related investment properties account, whichever is more appropriate. Assessment of the cost estimate is done at the end of each reporting period until the project is substantially
completed , if there is a change basis , the Company will revise the cost . Other inventories, consisting of food, beverages and other inventories, are stated at cost or net realizable value,
whichever is lower.
h. Prepaid expenses
