PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2013 and for the Year Then Ended
Figures in tables are expressed in billions of rupiah, unless otherwise stated
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
w. Dividends
Dividend distribution to the Company’s stockholders is recognized as a liability in the Company’s consolidated financial statements in the year in which the dividend is approved by the Company’s
stockholders. The Company recognizes interim dividend as a liability based on the Board of Directors’ decision with the approval from the Board of Commissioners.
x. Basic earnings per share and earnings per ADS
Basic earnings per share is computed by dividing profit for the year attributable to owners of the parent company by the weighted average number of shares outstanding during the year. Income
per ADS is computed by multiplying basic earnings per share by 200, the number of shares represented by each ADS.
The Company does not have potentially dilutive financial investments.
y. Segment information
The Company and subsidiaries segment information is presented based upon identified operating segments. An operating segment is a component of an entity: a that engages in business
activities from which it may earn revenues and incur expenses including revenues and expenses relating to transactions with other components of the same entity; b whose operating results are
regularly reviewed by the Company and subsidiaries chief operating decision maker i.e., Directors, to make decisions about resources to be allocated to the segment and assess its
performance, and c for which discrete financial information is available.
z. Provision
Provision is recognized when the Company and subsidiaries have a present obligation legal or constructive as a result of a past event, it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation, and a reliable estimate can be made of the obligation.
aa. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances.
The Company and subsidiaries make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
i. Retirement benefits
The present value of the retirement benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used
in determining the net cost income for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of retirement benefit obligations.
The Company and subsidiaries determine the appropriate discount rate at the end of each reporting period. This is the interest rate that should be used to determine the present value of
estimated future cash outflows expected to be required to settle the obligations. In determining the appropriate discount rate, the Company and subsidiaries consider the interest
rates of government bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related retirement benefit
obligations.
