Deffered Charges on Landrights Treasury Stocks Stock Issuance Costs Impairment of Assets
PT. TUNAS BARU LAMPUNG Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009 AND 2008 AND FOR THE NINE MONTHS PERIOD THEN ENDED Continued
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Leases
Effectively January 1, 2008, Finance leases which transfer to the Company or its subsidiaries as lessee substantially all the risks and benefits incidental to ownership of
the leased item, are capitalized at the inception of the lease at their fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease
payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest in the remaining balance of the
liability. Finance charges are charged directly against consolidated statements of income.
Capitalized leased assets are depreciated over the estimated useful life of the asset except if there is no reasonable certainty that the Company will obtain ownership by the
end of the lease term, in which case the capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term. Operating lease
payments are recognized as an expense in the consolidated statements of income on a straight-line basis over the lease term.
Lease where the Company or its subsidiaries as lessor retain substantially all the risks and benefits of the ownership of the asset are classified as operating leases. Initial
directs costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized over the lease term in the same basis as
rental income. Prior to January 1, 2008, lease transactions are accounted for under the capital lease
method when all of the following criteria are met:
1 The lessee has the option to purchase the leased asset at the end of the lease
term at a price mutually agreed upon at the inception of the lease agreement. 2
All periodic lease payments made by the lessee plus residual value shall represent a return of the cost of leased asset and interest thereon as the profit of the lessor.
3 Minimum lease period is two years.
Lease transactions that do not meet the above criteria are recorded as operating leases. Finance lease transaction are treated and recorded as leased assets included in
“Property, plant and equipment” and lease liabilities as “ Finance leased liabilities “ at the inception of the lease term. The leased assets and lease liabilities under the capital
lease method are recorded at the present value of the total lease installment payments plus residual value option price to be paid by the lessee at the end of lease term.
During the lease term, each lease payment is allocated and recorded as repayment of the lease liabilities and interest expenses thereon based on an interest rate applied to
the carrying amount of the related lease liabilities.
Leased assets are depreciated using the same method and estimated useful lives used for directly acquired property, plant and equipment.