PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2008 and 2007 Expressed in millions of Rupiah, unless otherwise stated
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued q. Other Assets
Other assets include accrued income for interest, fees and commissions, receivables, prepaid taxes, prepaid expenses, repossessed assets, abandoned properties, inter-branch accounts and others.
Repossessed assets represent assets acquired by Bank Mandiri, both from auction and outside auction based on voluntary transfer by the owner or based on power of attorney to sell outside auction
from the asset owners when the debtors cannot fulfill their liabilities to Bank Mandiri. Repossessed assets represent loan collateral acquired in settlement of loans and is included in “Other
Assets”. Abandoned properties represent the Bank’s fixed assets in the form of property not used in the usual Bank Mandiri business activity. Repossessed assets and abandoned properties are
presented at their net realizable value. Realizable 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 possible losses. Differences between the estimated realizable value and the proceeds from sale of the
repossessed assets are recognized in current year’s profit and loss at the time of sale.
Expenses for maintaining repossessed assets are recognized in the current year’s consolidated profit and loss. The carrying amount of the repossessed assets is written down to recognize a permanent
decline in value of the repossessed asset. Any such written down is recognized to the current year’s consolidated profit and loss.
r. Deposits from Customers
Demand deposits represent deposits of customers with Bank Mandiri and banking subsidiaries that may be used as instruments of payment, and which may be withdrawn at any time by cheque,
automated teller machine card ATM or other orders of payment or transfers. These are stated at nominal value.
Savings deposits represent deposits of customers with Bank Mandiri and banking subsidiaries that may only be withdrawn over the counter and via ATMs or funds transfers by SMS Banking, Phone
Banking and Internet Banking when certain agreed conditions are met, but which may not be withdrawn by cheque or other equivalent instruments. These are stated at nominal value.
Time deposits represent deposits of customers with Bank Mandiri and banking subsidiaries that may only be withdrawn after a certain time in accordance with the agreement between the depositor and
Bank Mandiri and banking subsidiaries. These are stated at the nominal amount set forth in the certificates between Bank Mandiri and banking subsidiaries and holders of time deposits.
Included in the deposits are syariah deposits and unrestricted investments consisting of the following: a. Wadiah is a wadiah yad-dhamanah deposit in which the depositor is entitled to receive bonus
income. b. Unrestricted investments in the form of mudharabah savings which entitle the depositor to receive
a share of Bank Syariah Mandiri BSM’s income in return for the usage of the funds in accordance with the defined terms nisbah.
c. Unrestricted investments in the form of mudharabah time deposits are fund deposits which entitle the depositor to receive a share of BSM’s income for the usage of the funds in accordance with the
defined terms nisbah.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2008 and 2007 Expressed in millions of Rupiah, unless otherwise stated
31
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
s. Deposits from Other Banks Deposits from other banks represent liabilities to local and overseas banks, in the form of demand
deposits, savings deposits, inter-bank call money with original maturities of 90 days or less and time deposits. These are stated at the amount due to the other banks.
Deposits from other banks include syariah deposits in the form of wadiah deposits and unrestricted investments which comprise mudharabah savings and mudharabah time deposits.
t. Securities Issued
Securities issued by the Bank, which include floating rate notes, medium-term notes and travelers’ cheques, are recorded at their nominal value. Under Bank Indonesia requirements deposits from other
banks with periods of more than 90 days are also presented as securities issued. Premiums or discounts arising from issuance of floating rate notes and medium-term notes are recognized as
deferred incomeexpense and amortized over the period of the securities.
u. Income Tax
Bank Mandiri and Subsidiaries apply the liability method to determine income tax expense. Under the liability method, deferred tax assets and liabilities are recognized for temporary differences between
the financial and the tax bases of assets and liabilities at each reporting date. This method also requires the recognition of future tax benefits, such as the carry-forward of unused tax losses, to the
extent that realization of such benefits is probable. Deferred tax is calculated using the valid tax rate or substantially has been valid on the balance sheet
date. The charge on the written value of deferred tax assets and liabilities are caused by the change in tax rate during the current year, except for transactions which previously have been directly charged or
credited to shareholders’ equity. Amendments to tax obligations are recorded when an assessment is received or, if appealed against,
when the result of the appeal is determined. The corporate income tax of Bank Mandiri and its Subsidiaries is computed for each company as a
separate legal entity. Current tax assets and current tax liabilities for different legal entities are not offset in the consolidated financial statements. Deferred tax assets are presented net of deferred tax
liabilities in the consolidated balance sheets.
v. Interest Income and Interest Expense
Interest income and interest expense are recognized on an accrual basis. Interest income on non- performing earning assets is not recognized, except to the extent of cash collections received. When a
loan is classified as non-performing, interest income previously recognized but not yet collected is reversed against interest income. The reversed interest income is recognized as a contingent
receivable. All receipts from credits classified as doubtful or loss are recognized firstly as a deduction of the
outstanding principal balance. The excess of receipts over the outstanding principal balance is recognized as interest income.
The interest income from restructured loan are recognized only when it is received in cash before the loan’s quality become current as determined by Bank Indonesia Regulation No. 72PBI2005 dated
January 20, 2005 regarding Asset Quality Rating for Commercial Banks.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2008 and 2007 Expressed in millions of Rupiah, unless otherwise stated
32
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued v. Interest Income and Interest Expense continued
Interest receivable on non-performing assets of Bank Mandiri and its Subsidiaries is treated as off- balance sheet and is disclosed in the notes to the consolidated financial statements.
Interest income and expense include syariah income and expense. Syariah income is earned from transactions of murabahah, istishna and ijarah and from mudharabah and musyarakah financing profit
sharing income. Income from murabahah and ijarah is recognized using the accrual basis while income from istishna transactions and mudharabah and musyarakah financing profit sharing is recognized
when cash is received as a payment of an installment. Syariah expense consists of expenses from mudharabah profit sharing and wadiah bonuses.
w. Fees and Commissions
Significant fees and commissions that are directly related to lending activities andor involving specific time periods are deferred and amortized using the straight-line method over those periods. The
balances of unamortized fees and commissions relating to loans settled prior to maturity are recognized upon settlement. Other fees and commissions that are not directly related to lending
activities or involving specific time periods are recognized as income at the transaction date.
x. Post-Employment Benefits
The estimated provision is based on the results of an independent actuarial valuation in accordance with Labor Law No. 132003 and the revised PSAK No. 24 regarding “Employee Benefits”.
Bank Mandiri established a defined contribution pension plan covering substantially all of its eligible employees from August 1, 1999. It also supports defined benefit pension plans, which were derived
from each of the Merged Banks’ pension plans.
Bank Mandiri recognizes a provision for post employment benefits under the Labor Law No. 132003 regarding the settlement of labor dismissal and the stipulation of severance pay, gratuity and
compensation in companies. The provision has been calculated by comparing the benefit that will be received by an employee at
normal pension age from the Pension Plans with the benefit as stipulated under the Labor Law No. 132003 after deducting accumulated employee contributions and the results of its investments. If
the pension benefit from the Pension Plans is less than the benefit as required by the Labor Law, the Bank will have to pay such shortage. Provision for employee service entitlements is accrued based on
the results of an independent actuary’s valuation. Actuarial gain and loss is recognized as income or expense if the net cumulative unrecognized actuarial gains or losses at the end of the previous
reporting period exceeded the greater of 10 of the present value of the defined benefit obligation at that date before deducting plan assets and 10 of the fair value of any plan assets at that date. The
amount of actuarial gain or loss is recognized through the average remaining working period of the employee in the program. Past service cost arises when the bank introduces a defined benefit plan or
changes the benefits payable under an existing defined benefit plan. Past service cost is recognized over the period until the benefits concerned are vested.
