PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of September 30, 2014 and for the Nine months Period Then Ended unaudited
Figures in tables are expressed in billions of rupiah, unless otherwise stated
28
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued m. Leases continued
Assets and liabilities under a finance lease are recognized in the consolidated statement of financial position at amounts equal to the fair value of the leased assets or, if lower, the present
value of the minimum lease payments. Any initial direct costs of the Company and subsidiaries are added to the amount recognized as assets.
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to
produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the year in which they are incurred.
Leased assets are depreciated using the same method and based on the useful lives as estimated for directly acquired property and equipment. However, if there is no reasonable
certainty that the Company and subsidiaries will obtain ownership by the end of the lease term, the leased assets are fully depreciated over the shorter of the lease term and their economic
useful lives. Lease arrangements that do not meet the above criteria are accounted for as operating leases for
which payments are charged as an expense on the straight-line basis over the lease period.
n. Deferred charges-land rights
Costs incurred to process the initial legal land rights are recognized as part of the property and equipment and are not amortized. Costs incurred to process the extension or renewal of legal land
rights are deferred and amortized over the shorter of the term of the land rights or the economic life of the land.
o. Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if
payment is due within one year or less or in the normal operating cycle of the business, if this period is longer. If not, they are presented as non-current liabilities.
Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method.
p. Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost; any difference between the proceeds net of transaction
costs and the redemption value is recognized in the consolidated statement of comprehensive income over the period of the borrowings using the effective interest method.
Fees paid on obtaining loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facilities will be drawn down. In this case, the fee is
deferred until the drawdown occurs. To the extent there is no evidence that it is probable that some or all of the facilities will be drawn down, the fee is capitalized as a pre-payment for liquidity
services and amortized over the period of the facilities to which it relates.
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of September 30, 2014 and for the Nine months Period Then Ended unaudited
Figures in tables are expressed in billions of rupiah, unless otherwise stated
29
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued q. Foreign currency translations
The functional currency and the recording currency of the Company and subsidiaries are both the Indonesian rupiah, except for the functional currency of Telekomunikasi Indonesia International
Pte. Ltd., Hong Kong, Telekomunikasi Indonesia International Pte., Singapore, and Telekomunikasi Indonesia International S.A., Timor Leste whose accounting records are
maintained in U.S. dollars. Transactions in foreign currencies are translated into Indonesian rupiah at the rates of exchange prevailing at transaction date. At the consolidated statement of financial
position date, monetary assets and liabilities denominated in foreign currencies are translated into Indonesian rupiah based on the buy and sell rates quoted by Reuters prevailing at the
consolidated statement of financial position date,as follows:
September 30, 2014 December 31, 2013
Buy Sell
Buy Sell United States dollar “US” 1
12,180 12,190 12,160 12,180 Euro 1
15,424 15,439 16,744 16,774 Yen 1
111.17 111.27 115.67 115.87 The resulting foreign exchange gains or losses, realized and unrealized, are credited or charged
to the consolidated statement of comprehensive income of the current year, except for foreign exchange differences incurred on borrowings during the construction of qualifying assets which
are capitalized to the extent that the borrowings can be attributed to the construction of those qualifying assets Note 2l.
r. Revenue and expense recognition
i. Fixed line telephone revenues Revenues from fixed line installations, including incremental costs, are deferred and
recognized as revenue and costs over the expected term of the customer relationships. Based on reviews of historical information and customer trends, the Company determined the
expected term of the customer relationships in 2014 and 2013 to be 18 years, respectively. Revenues from usage charges are recognized as customers incur the charges. Monthly
subscription charges are recognized as revenues when incurred by subscribers.
