PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
December 31, 2012 and 2011 and January 1, 2011December 31, 2010 and For the Years then Ended December 31, 2012 and 2011
Figures are Presented in Millions of Rupiah, unless Otherwise Stated
- 45 - The liabilities for future policy benefits are estimated by the Company’s registered actuary
based on outstanding policies in-force, including policies with unpaid premiums within the policy grace period, in accordance with actuarial principles generally accepted in Indonesia.
Policy acquisition costs are not deferred and are charged to expense as incurred. Changes in liabilities for insurance policy benefits are recognized as underwriting expenses in the
consolidated statement of comprehensive income for the current year. Unearned Premiums and Estimated Claims Liability
For ASM, unearned premiums are calculated in aggregate using a certain percentage which is at least 10 of net premiums for policies which cover a period of not more than one 1
month and at least 40 of net premiums for policies which cover a period of more than one 1 month, in accordance with the decree No. 424KMK.062003 dated September 30, 2003
issued by the Minister of Finance of the Republic of Indonesia, while for AJSM, unearned premium is calculated using the daily method by individual policy.
For ASM, estimated claims liability represents amounts set aside to provide for the outstanding and incurred claims arising from insurance policies in force during the
accounting period. The liability includes both repoted and unreported claims and calculated in accordance with the guidelines set by the Minister of Finance of the Republic of Indonesia
No. 424KMK 062003 dated September 30, 2003, while for AJSM, estimated claims liability represents amounts set aside to provide for the outstanding and incurred claims arising from
insurance policies in force during the accounting period. Management’s judgment is required to determine the amount of estimated claims liability.
Insurance Contract Liability Insurance contract liability consist of premium received in advance, estimated claim
liabilities, unearned premium and liability for future policy benefit. On reporting date, the Group assesses insurance contract liabilities whether the recognized insurance liabilities are
adequate using current estimates of future cash flow under the insurance contract. If the assessment represent insurance liability less related deferred acquisition cost is not
adequate if compared to current estimates of future cash flows, the deficiency is recognized in consolidated statement of comprehensive income.
x. Loans Received
Loans received are stated at amortized cost. Loans received classified as financial liability measured at amortized cost using the effective
interest rate method. Transaction costs are deducted from the loans received. Note 2i.
y. Securities Issued
Securities issued are securities issued in the form of Medium Term Notes MTN. Medium term notes are classified as financial liabilities measured at amortized cost using
the effective interest method. Transaction costs that are directly attributable to the acquisition value of securities issued are deducted from the amount securities issued
Note 2i.
PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
December 31, 2012 and 2011 and January 1, 2011December 31, 2010 and For the Years then Ended December 31, 2012 and 2011
Figures are Presented in Millions of Rupiah, unless Otherwise Stated
- 46 -
z. Financial Guarantee Contracts
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss incurred because a specified debtor defaulted
to make payments when due, in accordance with the terms of a debt instrument. Such financial guarantees are given from Group to bank, financial institutions and other
institutions on behalf of customers to secure loans and other banking facilities. Financial guarantees are initially recognized in the financial statements at fair value on the
date the guarantee was given. The fair value of a financial guarantee at inception is likely to equal the premium received because all guarantees are agreed on arm’s length terms and
the initial fair value is amortized over the life of the financial guarantees. Subsequently, these contracts are measured at the higher of amortized amount and the
present value of any expected payment when a payment under the guarantee has become probable and the difference is charged to other operating expense in the consolidated
statement of comprehensive income.
aa. Stock Issuance Costs
Stock issuance costs are deducted from the additional paid-in capital portion of the related proceeds from issuance of shares and are not amortized.
ab. Revenue and Expense Recognition
1. Recognition of Interest Revenues, Interest Expenses, Sharia Revenue, and Revenue Sharing Distribution
Interest Revenue and Interest Expenses
Interest income and interest expense for all financial instruments are recognized in the consolidated statement of income on accrual basis using the effective interest rate
method. Transaction costs that occur and are directly attributable to the acquisition or issuance
of financial instruments not measured at fair value through profit and loss are amortized over the life of financial instruments using the effective interest rate method and
recorded as part of interest income for financial assets directly attributable transaction costs, and as part of interest expense related to transaction costs of financial liabilities.
If a financial asset or group of similar financial assets in the category are held to maturity, loans and receivables, and available for sale are impaired, the interest income
earned after the impairment loss is recognized based on the interest rate used for discounting future cash flows in calculating impairment losses.
Revenue and ExpenseProfit Sharing Sharia
Revenue consists of income from murabahah sharia, income from muntahiyah bittamlik ijarah lease, and from the results of financing.
Murabahah and revenue from ijarah muntahiyah bittamlik are recognized over the contract period on an accrual basis. Revenues for the results of financing are
recognized when received or within the period of entitlement based on profit sharing portion agreed.
