PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2010, 2009 AND 2008
Expressed in millions of Rupiah, unless otherwise stated
Appendix 537 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
q. Investments in Shares continued
Allowance for impairment losses on temporary investments from debt to equity swaps are determined using Bank Indonesia criteria set out in Bank Indonesia Regulation No. 72PBI2005
dated 20 January 2005 on “Asset Quality Ratings for Commercial Banks”. This regulation classifies temporary investments from debt to equity swaps into the following classifications:
Holding Period Current
Up to 1 year Substandard
More than 1 year up to 4 years Doubtful
More than 4 years up to 5 years Loss
More than 5 years or the temporary investment has not been liquidated despite of the investee’s has accumulative profits
Temporary investment is written-off from the consolidated balance sheets 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”.
Investment in shares with ownership below 20 are classified as financial assets available for sale. Refer to Note 2b for the accounting policy of financial assets available for sale.
Changes in value of investments in subsidiaries which is caused by changes in the subsidiaries’ equity and is not a transaction between the Bank and the Subsidiaries, is recognised as part of the
equity as “Difference in Transactions of Equity Changes in Subsidiaries”. This account will be calculated in determining the parent companies’ profit and loss at the disposal of the investment
Note 33e.
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 exchange date. Goodwill is
presented as other assets and 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.
r. 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.
Non earning assets are divided into “Current”, “Sub-Standard”, “Doubtful” and “Loss”, Marketable securities classified as “Current”, “Substandard” and “Loss”.
In accordance with Bank Indonesia Regulation No. 72PBI2005 dated 20 January 2005 on “Asset Quality Ratings for Commercial Banks”, starting from 20 January 2006, the Bank is also required to
make a special allowance for possible losses on non-earning assets, such as repossessed assets, abandoned properties, inter-office accounts and suspense accounts.
This regulation classifies repossessed assets and abandoned properties into the following classification:
Holding Period Current
Up to 1 year Substandard
More than 1 year up to 3 years Doubtful
More than 3 years up to 5 years Loss
More than 5 years
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2010, 2009 AND 2008
Expressed in millions of Rupiah, unless otherwise stated
Appendix 538 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
r. Allowance for Possible Losses on Non-Earning Assets continued
The classification for interbranch and suspense accounts are as follows: Period
Current Up to 180 days
Loss More than 180 days
s. Acceptance Receivables and Payables
Acceptance receivables are classified as financial assets in loans and receivables. Refer to Note 2b for the accounting policy of loans and receivables.
Acceptance payables are classified as financial liabilities at amortised cost. Refer to Note 2b for the accounting policy for financial liabilities at amortised cost.
Prior to 1 January 2010, acceptance receivables are stated at the outstanding balance less allowance for impairment losses.
t. Other Assets
Other assets include accrued income for interest, provision and commissions, receivables, prepaid taxes, prepaid expenses, repossessed assets, abandoned properties, inter-branch accounts and
others.
Repossessed assets represent assets acquired by Bank Mandiri and Subsidiaries, both from auction and non auction based on voluntary transfer by the debtor or based on debtor’s approval to
sell the collateral where the debtor could not fulfill their obligations to Bank Mandiri and Subsidiaries. Repossessed assets represent loan collateral acquired in settlement of loans and is
included in “Other Assets”.
Abandoned properties represent Bank and Subsidiaries’ fixed assets in form of property which were not used for Bank and Subsidiaries’ business operational activity.
Repossessed assets and abandoned properties are presented at their net realisable values. Net realisable value is the fair value of the repossessed assets less estimated costs of liquidating the
repossessed assets. Any excess of the loan balance over the value of the repossessed assets, which is not recoverable from the borrower, is charged to the allowance for impairment losses.
Differences between the estimated realisable value and the proceeds from sale of the repossessed assets are recognised as current year’s gain or loss at the time of sale.
Expenses for maintaining repossessed assets and abandoned properties are recognised in the current year’s consolidated statement of income. The carrying amount of the repossessed assets is
impaired to recognise a permanent decrease in value of the repossessed asset. Any impairment occurred will be charged to the current year’s consolidated statement of income.
u. Obligation due Immediately
Obligations due immediately are recorded at the time of the obligations occurred from customer or other banks. Obligation due immediately are classified as financial liabilities at amortised cost. Refer
to Note 2b for the accounting policy for financial liabilities at amortised cost.
Prior to 1 January 2010, obligations due immediately are stated at the Bank’s and Subsidiaries obligations amount.
