Taxation Adaro Energy 2008 Annual Report English

144 Adaro Energy Annual Report 2008 www.adaro.com Adaro in Summary From Us to You Running Adaro Management Report Owning Adaro PT ADARO ENERGY Tbk Schedule 512 FORMERLY PT PADANG KARUNIA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2008 AND 2007 Expressed in million Rupiah, unless otherwise stated

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

w. Difference in value from restructuring transactions of entities under common control continued

The balance of the account “difference in value from restructuring transactions of entities under common control” can change when: i there are reciprocal transactions between entities under common control; ii there is quasi-reorganisation; iii under common control status is lost between transacting entities; or iv there is a transfer of the assets, liabilities, equity or other ownership instruments that caused the difference from restructuring transactions of entities under common to another party that is not under common control. When changes in the balance of this account result from point i, the existing balance is netted-off with the new transaction, hence creating a new balance for the account. When changes in the balance of the account come from point ii, then the balance is used to eliminate or add to the nega tive retained earnings balance. When changes in the balance of the account come from points iii or iv, then the balance is recognised as realised gain or loss.

x. Dividends

Dividend distribution to the Group’s shareholders is recognised as a liability in the Group’s consolidated financial statements in the period in which the dividends are declared.

y. Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and activities, actual results could differ from those estimates.

3. ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES

a. Acquisition of PT Saptaindra Sejati

On 17 December 2007, SIS increased its issued and paid in capital through the issuance of new shares. The Company acquired all 209,250 shares issued at par value of Rp 1,000,000 full amount per share, and the Company’s interest in SIS increased from 28.57 to 71.78. The restructuring transaction of 17 December 2007 was accounted for using the pooling-of-interests method as required under the Statement of Financial Accounting Standards No. 38 Revised 2004, “Accounting for Restructuring of Entities under Common Control” “SFAS No. 38 Revised 2004”, since the Company and SIS are entities under common control. Details of the book value of net assets acquired and the difference arising from this restructuring transaction of entities under common control are as follows: 2007 Purchase consideration through cash payment 209,250 Book value of net assets acquired 272,235 Difference in value from restructuring transactions of entities under common control 62,985 On 31 March 2008, SIS increased its issued and paid in capital through the issuance of 56,679 new shares for the conversion of all convertible bonds issued to Joyce Corner International Ltd “Joyce”, and the difference between the converted bonds and par value was recorded as additional paid-in capital. As a result of this new share issue, the Company’s interest in SIS decreased from 71.78 to 61.68. On 3 April 2008, the Company increased its ownership in SIS through the acquisition of the shares of PCI, SRIS and CSP, amounting to 39,036 shares, 39,035 shares and 19,517 shares, respectively, with the total acquisition amount of Rp 158,776. From these transactions, the Company’s interest in SIS increased from 61.68 to 85.92.