PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
December 31, 2011 and 2010 and For the Years then Ended
- 41 - Construction in Progress
Construction in progress represents property and equipment under construction which is stated at cost and is not depreciated. The accumulated costs will be reclassified to the
respective property and equipment account and will be depreciated when the construction is substantially complete and the asset is ready for its intended use.
t. Assets for Lease
Assets for lease are stated at cost, less accumulated depreciation and any impairment in value if any. Accounting policy for assets for lease is the same with directly acquired
property and equipment Note 2s. Rental income is presented under “Operating lease income” account in the consolidated statements of comprehensive income over the lease
period Note 2m.
u. Property under Build, Operate and Transfer BOT Agreement
Property under build, operate and transfer agreement is an asset, the development of which, was funded by the Company until the asset is ready for operation and then managed by the
Company until such time the asset will be transferred to asset holders at the end of concession period.
Property under build, operate and transfer agreement in progress is stated at cost and not depreciated. Accumulated costs will be transferred to property under build, operate and
transfer account and will be depreciated when the asset is ready for use.
v. Prepaid Expenses
Prepaid expenses are amortized over their beneficial or contract periods using the straight- line method.
w. Foreclosed Properties
Foreclosed properties are stated at the lower of carrying amount and fair value less costs to sell. The difference between between the value of the foreclosed properties
and the outstanding loan principal, if any, is changed to the current year consolidated statement of comprehensive income. The difference between the carrying value of the
foreclosed property and the proceeds from its sale is recognized as a gain or loss in the period the property was sold.
The costs of maintenance of foreclosed properties are charged to consolidated statement of comprehensive income when incurred.
The carrying amount of the property is written-down to recognize a permanent dimunition in value of the foreclosed property, which is charged to the current year consolidated statement
of comprehensive income. Refer to Note 2b concerning change in accounting policy on allowance for impairment of
non-productive assets in 2011.
x. Impairment of Non-Financial Assets
The Group assesses at each annual reporting period whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing
for an asset i.e. an intangible asset with an indefinite useful life, an intangible asset not yet available for use, or goodwill acquired in a business combination is required, the Group
makes an estimate of the asset’s recoverable amount.
