PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2012 AND FOR THE YEAR THEN ENDED
WITH COMPARATIVE FIGURES AS OF DECEMBER 31, 2011 AND FOR THE YEAR THEN ENDED AND AS OF JANUARY 1, 2011
Figures in tables are presented in billions of Rupiah, unless otherwise stated
19
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued c. Transactions with related parties continued
Key management personnel are identified as the persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any
director whether executive or otherwise of the Company and subsidiaries. The related-party status extends to the key management of the subsidiaries to the extent they direct the operations
of subsidiaries with minimal involvement from the Company’s management.
d. Business combinations
Business combination is accounted for using the acquisition method. The consideration transferred is measured at fair value, which is the excess of the fair values assets transferred,
liabilities incurred or assumed and the equity instruments issued in exchange for control of the acquiree. Acquisition related costs are expensed as incurred. The acquiree’s identifiable assets
and liabilities are recognized at their fair values at the acquisition date.
Goodwill arising on acquisition is recognized as an asset and measured at cost representing the excess of the aggregate of the consideration transferred and non-controlling interests over the
acquiree’s net identifiable assets acquired and liabilities assumed. For each business combination, non-controlling interest is measured at fair value or at the proportionate share of the
acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction by transaction basis.
When the determination of consideration from a business combination includes contingent consideration, it is measured at its acquisition-date fair value. Contingent consideration is
classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value where the changes in such fair value is recognized in profit
or loss or when the adjustments are recorded outside the measurement period. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are
adjusted retrospectively, with corresponding adjustments made against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the
measurement period, which cannot exceed one year from the acquisition date, about facts and circumstances that existed at the acquisition date.
For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows, known as cash-generating unit. If the recoverable amount of
the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated to reduce the carrying amount of any goodwill allocated to the unit and then to the other
assets of the unit pro-rata on the basis of the carrying amount of the asset in the unit. Impairment losses recognized over goodwill are not able to be reversed in the subsequent period.
The acquisition of entities under common control is accounted for using book value, in a manner similar to that of pooling of interests accounting carry over basis. Any difference between the
consideration paid or received and the related historical carrying amount of the equity acquired interest after considering income tax effects, is recognized directly in equity and reported as
“Difference in value arising from restructuring transactions and other transactions between entities under common control” in the equity section of the consolidated statement of financial
position.
Recoverable amount is the higher of fair value less costs to sell and value in use. In determining the value in use, the estimated future cash flows which expected to be received are discounted to
the present value using a pre-tax discount rate that reflects current market assesments of the time value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2012 AND FOR THE YEAR THEN ENDED
WITH COMPARATIVE FIGURES AS OF DECEMBER 31, 2011 AND FOR THE YEAR THEN ENDED AND AS OF JANUARY 1, 2011
Figures in tables are presented in billions of Rupiah, unless otherwise stated
20
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued e. Cash and cash equivalents
Cash and cash equivalents comprises cash on hand and in banks and all unrestricted time deposits with an original maturity of three months or less at the time of placement.
Time deposits with maturities of more than three months but not more than one year, are presented as other current financial assets.
f. Investments in associated companies
Investments in companies where the Company and subsidiaries have 20 to 50 of the voting rights, and through which the Company and subsidiaries exert significant influence, but not
control, over the financial and operating policies are accounted for using the equity method. Under this method, the Company and subsidiaries recognize their proportionate share in the
income or loss of the associated company from the date that significant influence commences until the date that significant influence ceases. When the Company and subsidiaries’ share of loss
exceeds the carrying amount of the investment in associated company, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the
Company and subsidiaries have incurred legal or constructive obligations or made payments on behalf of the associate.
Investment in joint ventures is accounted for using the equity method whereby the participation in a joint venture is initially recorded at cost and subsequently adjusted for changes in the share of
the venturer of the joint venture’s net assets that occurred after the acquisition.
The Company and subsidiaries determine at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If there is, the Company and
subsidiaries calculate and recognize the amount of impairment as the difference between the recoverable amount of the investment in associate and its carrying value.
These assets are included in long-term investments in the consolidated statement of financial position.
The functional currency of PT Pasifik Satelit Nusantara “PSN” and PT Citra Sari Makmur “CSM” is the United States Dollar “U.S. Dollars” and the functional currency of Scicom MSC
Berhad “Scicom” is Malaysian Ringgit “MYR”. For the purpose of reporting these investments using the equity method, the assets and liabilities of these companies as of the statement of
financial position date are translated into Indonesian Rupiah using the rate of exchange prevailing at that date, while revenues and expenses are translated into Indonesian Rupiah at the average
rates of exchange for the period. The resulting translation adjustments are reported as part of translation adjustment in the equity section of the consolidated statements of financial position.
g. Trade and other receivables
Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost, less provision for impairment. This provision for impairment is made based on
management’s evaluation of the collectability of outstanding amounts. Receivables are written off in the period during which they are determined to be uncollectible.
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2012 AND FOR THE YEAR THEN ENDED
WITH COMPARATIVE FIGURES AS OF DECEMBER 31, 2011 AND FOR THE YEAR THEN ENDED AND AS OF JANUARY 1, 2011
Figures in tables are presented in billions of Rupiah, unless otherwise stated
21
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued h. Inventories
Inventories consist of components and modules, which are subsequently expensed or transferred to property and equipment upon use. Components and modules represent telephone terminals,
cables, transmission installation spare parts and other spare parts. Inventories also include Subscriber Identification Module “SIM” cards, Removable User Identity Module “RUIM” cards,
handsets, set top box, wireless broadband modem and blank prepaid voucher, which are expensed upon sale. The costs of inventories comprise of the purchase price, import duties, other
taxes, transport, handling and other costs directly attributable to their acquisition. Inventories are stated at the lower of cost and net realizable value. Net realizable value is the estimate of selling
price less the costs to sell.
Cost is determined using the weighted average method for components, SIM cards, RUIM cards, handsets, set top box, wireless broadband modem and blank prepaid voucher, and the specific
identification method for modules. The amount of any write-down of inventories below cost to net realizable value and all losses of
inventories shall be recognized as an expense in the period in which the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in
net realizable value, shall be recognized as a reduction in the amount of general and administrative expense in the period in which the reversal occurs.
Provision for obsolescence is primarily based on the estimated forecast of future usage of these items.
i. Prepaid expenses
Prepaid expenses are amortized over their future beneficial periods using the straight-line method.
j. Asset held for sale
Assets or disposals groups are classified as asset held for sale when their carrying amount is to be recovered principally through a sale transaction rather than through continuing use and a sale
is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.
Assets that meet the criteria to be classified as held for sale are reclassified from property and equipment and depreciation on such assets is ceased.
k. Intangible assets
Intangible assets comprised of intangible assets from subsidiaries or business acquisitions, licenses and computer software. Intangible assets shall be recognized if it is probable that the
expected future economic benefits that are attributable to each asset will flow to the Company and subsidiaries and the cost of the asset can be reliably measured.
