Fixed assets and depreciation

PT XL AXIATA Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2007, 2008 AND 2009; AND 31 MARCH 2009 AND 2010 Expressed in millions of Rupiah, unless otherwise stated Page 18

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

l. Derivative financial instruments continued

Derivative financial instruments are measured at fair value and recognised as either assets or liabilities on the balance sheet. Changes in the fair value of derivatives are recognised in earningslosses or as part of equity, depending on the designated purpose of the derivatives and whether they qualify for hedge accounting. Change in the fair value of derivatives that do not meet the criteria of hedging for accounting purposes are recorded in the consolidated statements of income. The fair value of derivative financial instruments is classified as a non-current asset or liability if the remaining maturities of the derivative financial instruments are greater than 12 twelve months.

m. Foreign currency translation

Transactions denominated in foreign currencies are translated into Rupiah at the rates prevailing as at the date of the transaction. As at the balance sheet date, monetary assets and monetary liabilities denominated in foreign currencies are translated into Rupiah using the Bank of Indonesia middle rate prevailing as at that date. The exchange rates of the major foreign currencies used are as follows full amount: 31122007 31122008 31122009 31032009 3103 2010 United States Dollar USD 9,419 10,950 9,400 11,575 9,115 Euro EUR 13,760 15,432 13,510 15,327 12,216 Singapore Dollar SGD 6,502 7,607 6,699 7,617 6,505 Swiss Franc CHF 8,260 10,349 9,087 10,094 8,536 Australian Dollar AUD 8,229 7,556 8,432 7,949 8,344 Realised and unrealised foreign exchange gains or losses arising from transactions in foreign currency and from the translation of foreign currency monetary assets and liabilities are recognised in the current year consolidated statements of income.

n. Taxation

Deferred income tax is provided using the balance sheet liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for each entity separately. Deferred income tax is determined using tax rates that have been enacted or substantially enacted at the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets relating to the carry forward of unused tax losses are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised. PT XL AXIATA Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2007, 2008 AND 2009; AND 31 MARCH 2009 AND 2010 Expressed in millions of Rupiah, unless otherwise stated Page 19

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued