PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
December 31, 2012 and 2011 and January 1, 2011December 31, 2010 and For the Years then Ended December 31, 2012 and 2011
Figures are Presented in Millions of Rupiah, unless Otherwise Stated
- 25 - Acquisition of a subsidiary from entities under common control which is a reorganization of
companies under common control pooling of interest, is accounted for in accordance with PSAK No. 38 Revised 2004, “Accounting for Restructuring Transactions among Entities
under Common Control. Transfer of assets, liabilities, shares and other instruments of ownership among entities under common control do not result in a gain or loss to the group
or to the individual company within the same group. Since a restructuring transaction among entities under common control does not result in a change of the economic substance of the
ownership of assets, liabilities, shares and other instruments of ownership which are exchanged, assets or liabilities transferred are recorded at book values as business
combination using the pooling of interest method. Any difference between the transfer price and book value of each restructuring transaction
between entities under common control is recorded in the account “Difference in value of restructuring transactions among entities under common control,” presented as a
component of equity. The balance of “Difference in value arising from restructuring transactions among entities on
control” account is taken to the consolidated statements of comprehensive income as realized gain or loss as a result of 1 loss of under common control substance, and
2 transfer of the assets, liabilities, equity or other ownerhip instruments to another party who is not under common control. On the other hand, when there are reciprocal
transactions between entities under common control, the existing balance is set - off with the new transaction, hence creating a new balance of this account
e. Foreign Currency Translation
Functional and Reporting Currencies Items included in the financial statements of each of the Group’s companies are measured
using the currency of the primary economic environment in which the entity operates the functional currency.
The consolidated financial statements are presented in Rupiah which is the Company’s functional and presentation currency.
Transactions and Balances Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated statement of comprehensive income. Non-monetary assets
that are measured at fair value are translated using the exchange rate at the date that the fair value was determined. Translation differences on equities and similar non-monetary
items measured at fair value are recognized in profit or loss. As of December 31, 2012 and 2011, the conversion rates used by the Group were the
middle rates of Bank Indonesia of Rp 9,670 in Rupiah full amount and Rp 9,068 in Rupiah full amount, respectively, per US 1.
The conversion rates used by BS a subsidiary engaged in banking to translate monetary assets and liabilities as of December 31, 2012 and 2011, are the Reuters rate at 16:00 WIB
of Rp 9,637.5 in Rupiah full amount and Rp 9,067.5 in Rupiah full amount, respectively, per US 1.
PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
December 31, 2012 and 2011 and January 1, 2011December 31, 2010 and For the Years then Ended December 31, 2012 and 2011
Figures are Presented in Millions of Rupiah, unless Otherwise Stated
- 26 -
Group Companies The results and financial position of all the Group companies that have a functional currency
different from the reporting currency are translated into the reporting currency as follows: a.
assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
b. income and expenses for each statement of income are translated at average exchange rates; and
c. all resulting exchange differences are recognizedas a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities are taken to equity. When a foreign operation is sold, such exchange
differences are recognized in the consolidated statement of comprehensive income as part of the gain or loss on sale.
Global Asian Investment Limited GAI, a subsidiary, and Sinar Mas Insurance SMI, a subsidiary of ASM, use the United States Dollar for functional currency, and Nanjing Sinar
Mas ZiJin Venture Capital Management Co Ltd NSZ, a subsidiary of GAI, uses the China Yuan for functional currency.
Management determines that the United States Dollar and China Yuan as functional currencies and recording currencies are appropriate since the transactions and main
accounts of GAI and SMI are in United States Dollar and China Yuan, respectively. For consolidation purposes, accounts in NSZ financial statements are translated in United
States Dollar and then accounts in GAI and subsidiary’ and SMI’ financial statement are translated in Rupiah.
f. Transactions with Related Parties
A related party is a person or entity that is related to the Group: 1. A person or a close member of that persons family is related to the Group if that
person: a.
has control or joint control over the Group; b.
has significant influence over the Group; or c.
is a member of the key management personnel of the reporting entity or of a parent of the Group.
2. An entity is related to the Group if any of the following conditions applies: a.
The entity and the Group are members of the same group. b. One entity is an associate or joint venture of the other entity or an associate or
joint venture of a member of a group of which the other entity is a member. c. Both entities are joint ventures of the same third party.
d. One entity is a joint venture of a third entity and the other entity is an associate of
the third entity. e. The entity is a post-employment defined benefit plan for the benefit of employees
of either the Group or an entity related to the Group. If the Group is itself such a plan, the sponsoring employers are also related to the Group.
f. The entity is controlled or jointly controlled by a person identified in a.
g. A person identified in a i has significant influence over the entity or is a member
of the key management personnel of the entity or of a parent of the entity.
PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
December 31, 2012 and 2011 and January 1, 2011December 31, 2010 and For the Years then Ended December 31, 2012 and 2011
Figures are Presented in Millions of Rupiah, unless Otherwise Stated
- 27 - All transactions with related parties, whether or not done under similar terms and conditions
as those done with third parties, are disclosed in the consolidated financial statements.
g. Cash and Cash Equivalents
Cash and cash equivalents consists of cash on hand, cash in banks, demand deposits with Bank Indonesia, time depsoits with original maturities of three 3 months or less from the
date of placements, funds placed in securities companies and which are not used as collateral and are not restricted.
h. Minimum Liquidity Reserve
On October 23, 2008, Bank Indonesia BI issued a regulation No. 1025PBI2008 regarding the amendement of Bank Indonesia Regulation No. 10192008 dated October 14,
2008, regarding Statutory Reserves at Bank Indonesia for Commercial Banks. The said regulation was amended with Bank Indonesia Regulation No.1219PBI2010 dated October
4, 2010 regarding of Statutory Reserves at Bank Indonesia for Commercial Banks in Rupiah and Foreign Currency which is effective on November 1, 2010, except for Loan to Deposits
LDR Reserve which is effective on March 1, 2011
On February 9, 2011, BI issued Regulation PBI No. 1310PBI2011 No. 12192010 regarding the amendment of Bank Indonesia Regulation Statutory Reserves at Bank
Indonesia for Commercial Banks in Rupiah and Foreign Currency Based on the Bank Indonesia Regulation, the statutory reserve consists of Rupiah and Foreign Currency
Reserve. Statutory Reserve in Rupiah consist of Primary Reserve, Secondary Reserve, and Loan to Deposit Ratio LDR Reserve.
Primary Statutory Reserve is a minimum deposit that should be maintained by the bank in current account with BI based on a certain percentage of Third Party Fund TPF as
determined by BI.
Secondary Statutory Reserve is a minimum deposit that should be maintained by the bank in the form of Bank Indonesia Certificates SBI, Government Debenture Debt
SUN andor Excess Reserve, based on certain percentage of TPF in accordance with the regulation.
LDR Reserve is a minimum deposit required to be maintained by the banks in the form of current account with BI for the percentage of TPF which is calculated based on the
difference of LDR held by banks and Target LDR which must be complied with by banks.
i. Financial Instruments
Effective January 1, 2012, the Group has applied PSAK No. 50 Revised 2010, “Financial Instruments: Presentation”, PSAK No. 55 Revised 2011, “Financial Instruments:
Recognition and Measurement”, and PSAK No. 60, “Financial Instruments: Disclosures”.
The Group recognizes a financial asset or a financial liability in the consolidated statement of financial position if, and only if, they become a party to the contractual provisions of the
instrument. All regular way purchases and sales of financial instruments are recognized on the transaction date.
Financial instruments are recognized initially at fair value, which is the fair value of the consideration given in case of an asset or received in case of a liability. The fair value of
the consideration given or received is determined by reference to the transaction price or other market prices. If such market prices are not reliably determinable, the fair value of the
consideration is estimated as the sum of all future cash payments or receipts, discounted using the prevailing market rates of interest for similar instruments with similar maturities.
The initial measurement of financial instruments, except for financial instruments at fair value through profit and loss FVPL, includes transaction costs.
