PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 2014 and for three months period then ended unaudited
Figures in tables are expressed in billions of rupiah, unless otherwise stated
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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 subsidiarieshave 20 to 50 of the voting rights, and through which the Company and subsidiariesexert significant influence, but not control,
over the financial and operating policies are accounted for using the equity method. Under this method, the Companyand subsidiariesrecognize their proportionate share in the income or loss of
the associated companies 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 investments in associated companies, 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 associated companies.
Investment in a joint venture is accounted for using the equity method whereby the participation in a joint venture is initially recorded at cost and subsequently adjusted for changes that occur after
the acquisition in the share of the venturer of the joint venture’s net assets.
The Company and subsidiaries determine at each reporting date whether there is any objective evidence that the investments in the associated companies are impaired. If there is, the Company
and subsidiaries calculate and recognize the amount of impairment as the difference between the recoverable amount of the investments in associated companies and their carrying value.
These assets are included in long-term investment 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 Telin Malaysia is
the 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 year. The resulting translation adjustments are reported as part of translation adjustment in the equity section of the consolidated statement 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 collectibility of outstanding amounts. Receivables are written off in the year during which they are determined to be uncollectible.
h. Inventories
Inventories consist of components, which are subsequently expensed or transferred to property and equipment upon use. Components represent telephone terminals, cables, and other spare
parts. Inventories also include Subscriber Identification Module “SIM” cards, Removable User Identity Module “RUIM” cards, handsets, set top box, wireless broadband modems, and blank
prepaid vouchers, which are expensed upon sale.
