PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED continued SEPTEMBER 30, 2007 AND 2008,
AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2007 AND 2008 Figures in tables are presented in millions of Rupiah, unless otherwise stated
123
55. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN INDONESIAN GAAP AND U.S. GAAP
The consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with Indonesian GAAP, which differ in certain significant respects from U.S. GAAP. A
description of the differences and their effects on net income and stockholders’ equity are set forth below:
1 Description of differences between Indonesian GAAP and U.S. GAAP
a. Voluntary termination benefits Under Indonesian GAAP, voluntary termination benefits are recognized as liabilities when the
Company is demonstratively committed to provide termination benefits as a result of an offer made in order to encourage voluntary redundancy.
Under U.S. GAAP, voluntary termination benefits liabilities are recognized only when the employees have accepted the offer and the related amount can be reasonably estimated.
b. Foreign exchange differences capitalized to assets under construction Under Indonesian GAAP, foreign exchange gains and losses resulting from borrowings used
to finance the construction of the qualifying assets are capitalized as part of the cost of the qualifying assets. Capitalization of foreign exchange gains and losses ceases when the
construction of the qualifying asset is substantially completed and the constructed property is ready for its intended use.
Under U.S. GAAP, foreign exchange gains and losses are credited and charged to the consolidated statement of income as incurred.
c. Embedded derivative instrument The Company and its subsidiaries entered into contracts with their vendors which require
payments denominated in various currencies other than functional currencies of both parties. Under Indonesian GAAP, contracts which require payments denominated in foreign
currencies other than functional currencies of a party or substantial party to the contracts are not presumed to contain embedded foreign currency derivative instruments if the currencies
are commonly used in local business transactions.
Under U.S. GAAP, the contracts do not qualify for such exception unless they are routinely denominated in a currency commonly used in international commerce. Hence, the foreign
currency derivative instruments shall be separated from the host contract and accounted for as embedded foreign currency derivative instruments.
PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED continued SEPTEMBER 30, 2007 AND 2008,
AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2007 AND 2008 Figures in tables are presented in millions of Rupiah, unless otherwise stated
124
55. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN INDONESIAN GAAP AND
U.S. GAAP continued 1 Description of differences between Indonesian GAAP and U.S. GAAP continued
d. Interest capitalized on assets under construction Under Indonesian GAAP, qualifying assets, to which interest cost can be capitalized, should
be those that take a minimum of 12 months to get ready for their intended use or sale. To the extent that funds are borrowed specifically to finance the construction of a qualifying asset,
the amount of the interest cost eligible for capitalization on that asset should be determined based on the actual interest cost incurred on that borrowing during the period of construction
less any investment income on the temporary investment of those borrowings.
Under U.S. GAAP, there is no minimum limit i.e. a minimum 12-month construction period requirement on the length of the construction period in which the interest cost could be
capitalized. The amount of interest cost to be capitalized for qualifying assets is intended to be that portion of the interest cost incurred during the construction periods that theoretically
could have been avoided if expenditures for the assets had not been made. The interest cost need not arise from borrowings specifically made to acquire the qualifying assets. The
amount capitalized in a period is determined by applying an interest rate to the average amount of accumulated expenditures for the assets during the period. Interest income arising
from any unused borrowings is recognized directly as income in the consolidated statement of income.
e. RSA Under Indonesian GAAP, property, plant and equipment built by an investor under RSA are
recognized as property, plant and equipment under RSA in the accounting records of the party to whom ownership in such properties will be transferred at the end of the revenue-
sharing period, with a corresponding initial credit to unearned income. The property, plant and equipment are depreciated over their useful lives, while the unearned income is
amortized over the revenue-sharing period. The Company records its share of the revenues earned, net of amounts due to the investors.
Under U.S. GAAP, the RSA are recorded in a manner similar to capital leases where the property, plant and equipment and obligation under RSA are reflected on the consolidated
balance sheet. All the revenues generated from the RSA are recorded as a component of operating revenues, while a portion of the investors’ share of the revenues from the RSA is
recorded as interest expense with the balance treated as a reduction of the obligation under RSA.
f. Employee benefits The Company and its subsidiaries adopted PSAK 24 Revised 2004 in accounting for the
costs of pension benefit, post-retirement health care benefit and other post-retirement benefits for Indonesian GAAP purposes.
