PT SUMMARECON AGUNG Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2013 AND DECEMBER 31, 2012, 2011 AND 2010 AND FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2013 AND 2012 UNAUDITED
AND YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010 Expressed in thousands of rupiah, unless otherwise stated
50
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued aa. Sukuk Ijarah
The Company has implemented PSAK Syariah No. 110 “Accounting for Sukuk”. Sukuk ijarah is recognized when the Company becomes parties involved with the issuance terms of sukuk ijarah
and presented as liabilities. At initial recognition, sukuk ijarah is stated at nominal amount, adjusted with premium or discount and sukuk ijarah issuance costs. After initial recognition, if the
amount recorded is different with nominal amount, the difference is amortized using the straight line method over period of sukuk ijarah.
Sukuk ijarah issuance costs are directly deducted from the issue proceeds in the consolidated statements of financial position as a transaction cost and are amortized using the straight-line
method for sukuk ijarah over period of the sukuk ijarah.
3. MANAGEMENT’S USE OF JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the consolidated financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and
liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability affected in future periods. Judgments
In the process of applying the Company’s and Subsidiaries’ accounting policies, management has made the following judgments, apart from those involving estimations and assumptions, which have
the most significant effect on the amounts recognized in the consolidated financial statements:
• Revenue recognition
When a contract for the sale of a property upon completion of construction is judged to be a construction contract see revenue recognition policy for sales of property under development,
revenue is recognized using the percentage-of-completion method as construction progresses. The percentage of completion is made by reference to the stage of completion of the project or
contract, determined based on the proportion of the contract costs incurred to date to the total estimated costs of the project or contract.
• Business combinations
As part of its business strategy, the Company acquires subsidiaries that own real estate. At the time of acquisition, the Company considers whether the acquisition represents the acquisition of a
business. The Company accounts for an acquisition as a business combination where an integrated set of activities is acquired in addition to the property. More specifically, consideration is
made of the extent to which significant processes are acquired and, in particular, the extent of ancillary services provided by the subsidiary e.g., maintenance, cleaning, security, bookkeeping,
hotel services, etc.. The significance of any process is judged with reference to the guidance in PSAK No. 22 Revised 2010 on ancillary services.
PT SUMMARECON AGUNG Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2013 AND DECEMBER 31, 2012, 2011 AND 2010 AND FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2013 AND 2012 UNAUDITED
AND YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010 Expressed in thousands of rupiah, unless otherwise stated
51
3. MANAGEMENT’S USE OF JUDGMENTS, ESTIMATES AND ASSUMPTIONS continued Judgments continued
• Business combinations continued
When the acquisition of a subsidiary does not represent a business acquisition, it is accounted for as an acquisition of a group of assets and liabilities. The cost of the acquisition is allocated to the
assets and liabilities acquired based upon their relative fair values, and no goodwill or deferred tax is recognized.
• Classification of property
The Company and Subsidiaries determine whether an acquired property is classified as investment property or property inventory:
- Investment property consists of land and buildings principally offices, commercial warehouse
and retail property which are not occupied substantially for use by, or in the operations of, the Company and Subsidiaries, nor for sale in the ordinary course of business, but are held
primarily to earn rental income and capital appreciation.
- Property inventory consists of property that is held for sale in the ordinary course of business.
Principally, this is residential property that the Company and Subsidiaries develop and intend to sell before or on completion of construction.
• Operating lease contracts - the Company or Subsidiaries as lessor
The Company and Subsidiaries have entered into commercial property leases on their investment property portfolio. The Company and Subsidiaries have determined, based on an evaluation of the
terms and conditions of the arrangements, that they retain all the significant risks and rewards of ownership of the leased property and, therefore, they account for the leases as operating leases.
Estimates and Assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the end
of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
• Determination of fair value of financial assets and financial liabilities
When the fair value of financial assets and financial liabilities recorded in the consolidated statements of financial position cannot be derived from active markets, their fair value is
determined using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a
degree of judgment is required in establishing fair value.
The judgment includes consideration of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial
instruments.
