NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2012 AND 2011
Expressed in millions of Rupiah, unless otherwise stated
Appendix 536 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
r. Fixed Assets and Leased Assets continued
i. Fixed assets and Software continued Prior to January 1, 2012, the land assets are recorded in accordance with SFAS 47, Accounting
for Land, all costs and expenses incurred in connection with the acquisition of land rights, among others, the cost, the cost of survey and measurement, notary fees and taxes associated with it, are
deferred and presented separately from the cost of land acquisition. Cost of acquiring land rights are deferred are presented as part of Other Assets in the consolidated statements of financial
position and is amortized over the useful life of the relevant land rights using the straight-line method.
In addition, SFAS 47 also states that the right to land is not amortized unless it meets certain conditions specifie.
Starting 1 January 2012, in accordance with IAS 16 Fixed Assets and ISAK 25 Land Rights. The cost of land rights in the form of right to cultivate, right to build and use rights are recognized
as fixed assets. The acquisition cost is the cost that are directly attributable to obtain land rights, including the cost of legal rights to the land when the land was first acquired.
Land rights in the form of right to cultivate, right to build and use rights are not depreciated, unless there is evidence to indicate that the extension or renewal of land is likely to or definitely not
obtained.
SFAS No. 48 Revised 2009, “Impairment of Assets” states that the carrying amounts of fixed assets are reviewed at each consolidated statement of financial position date to assess whether
they are recorded in excess of their recoverable amounts and, when carrying value exceeds this estimated recoverable amount, assets are written down to their recoverable amount.
Effective 1 January 2008, Bank Mandiri applied SFAS No. 16 Revised 2007 “Fixed Assets”. Bank Mandiri and Subsidiaries chose the cost model, and therefore, the balance of fixed assets
revaluation reserve at the first time adoption of SFAS No. 16 Revised 2007, which were presented in the shareholders’ equity section amounting to Rp3,046,936 in the consolidated
statement of financial position, were reclassified to appropriated retained earnings in 2008.
ii. Leased assets The Group apply SFAS No. 30 Revised 2011 of the Lease, effective beginning on or after 1
January 2008. Under SFAS No. 30 Revised 2011, determination of whether an agreement is a lease agreement or lease agreement containing the substance of the agreement based on the
inception date and whether the fulfillment of the agreement depends on the use of an asset and the agreement provides a right to use the asset. According to this revised SFAS, leases that
transfer substantially all the risks and rewards incidental to ownership, are classified as finance leases. Further, a lease is classified as operating leases, if the lease does not transfer
substantially all the risks and benefits incidental to ownership of assets.
Based on SFAS No. 30 Revised 2011, under a finance leases, Bank and Subsidiaries recognise assets and liabilities in its consolidated statement of financial position at amounts equal to the fair
value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. Lease payment is apportioned between the finance
charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining
balance of the liability. Finance charges are reflected in the consolidated statement of income. Capitalised leased assets presented under fixed assets are depreciated over the shorter of the
estimated useful life of the assets and the lease term, if there is no reasonable certainty that the Bank will obtain ownership by the end of the lease term.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2012 AND 2011
Expressed in millions of Rupiah, unless otherwise stated
Appendix 537 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
r. Fixed Assets and Leased Assets continued
ii. Leased assets continued Under an operating lease, the Bank recognise lease payments as an expense on a straight-line
basis over the lease term. If a rental agreement contains elements of land and buildings, the Bank assessed the
classification of each element as a finance lease or an operating lease separately.
s. Investments in Shares
Investments in shares represent long-term investments in non-publicly-listed companies and temporary investments in debtor companies arising from conversion of loans to equity.
Investments in shares representing ownership interests of 20.00 to 50.00 are accounted for using the equity method. Under this method, investments are stated at cost and adjusted for the
Bank’s proportionate share in the net equity of the investees and reduced by dividends earned starting the acquisition date net of by allowance for impairment losses.
Temporary investment is written-off from the consolidated statement of financial position if it is held for more than 5 years in accordance with Bank Indonesia Regulation No. 72PBI2005 dated
20 January 2005 on “Asset Quality Ratings for Commercial Banks”, as amended by Bank Indonesia Regulation No. 112PBI2009 dated 29 January 2009. Since 24 October 2012, Group follows Bank
Indonesia Regulation No. 1415PBI2012 dated 24 October 2012 Regarding “Asset Quality Rating for Commercial Banks”.
Investment in shares with ownership below 20 are classified as financial assets available for sale. Refer to Note 2c for the accounting policy of financial assets available for sale.
Goodwill is recognised, when there is a difference between the acquisition cost and the Bank’s portion of the fair value of identified assets and liabilities at the acquisition date. Goodwill is
presented as other assets. Starting 1 January 2011, with the effective implementation of SFAS No. 22 Revised 2010 “Business Combination”, Goodwill arised from acquisition prior to 1 January 2011
is not amortised but subject to regular impairment assessment. Prior to 1 January 2011, Goodwill is amortised as expense over the period using the straight-line method, unless there is other method
considered more appropriate in certain conditions. The Goodwill amortisation period is 5 five years, but a longer amortisation period may be applied with maximum 20 years period with appropriate
basis.
t. Allowance for Possible Losses on Non-Earning Assets
Non-earning assets of Bank Mandiri and the Subsidiaries’ assets consist of repossessed assets, abandoned properties, inter-office accounts and suspense accounts.
Starting 1 January 2011, the Bank provided an allowance for impairment of collateral confiscated and abandoned property to the value of the lower of carrying amount and fair value net of costs to
sell. As for the inter-office account and suspense account, the value of the lower of carrying value and the recovery value.
u. Acceptance Receivables and Payables
Acceptance receivables are classified as financial assets in loans and receivables. Refer to Note 2c for the accounting policy of loans and receivables.
Acceptance payables are classified as financial liabilities at amortised cost. Refer to Note 2c for the accounting policy for financial liabilities at amortised cost.
