PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2011 AND 2010
Expressed in millions of Rupiah, unless otherwise stated
Appendix 525 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
c. Financial instruments continued G. Allowance for impairment losses of financial assets continued
a Financial assets carried at amortised cost continued Bank determines loans to be evaluated for impairment through individual evaluation if one of
the following condition is met: 1. Loans which individually have significant value and objective evidence of impairment; or
2. Restructured loans which individually have significant value. Bank determines loans to be evaluated for impairment through collective evaluation if one of
the following condition is met: 1. Loans which individually have significant value and there are no objective evidence of
impairment; or 2. Loans which individually have insignificant value; or
3. Restructured loan which individually have insignificant value. Individual impairment calculation
The amount of the loss is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows excluding future impairment
losses that have not been incurred discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the allowance for
impairment losses account and the amount of the loss is recognised in the consolidated statement of income. If a loan or held-to-maturity financial assets has a variable interest
rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for
obtaining and selling the collateral, whether or not foreclosure is probable.
The Bank uses a fair value of collateral method as a basis for future cash flow if, one of the following conditions is met:
1. Loans are collateral dependent, i.e. if source of loans repayment comes only from the collateral; or
2. Foreclosure of collateral is most likely to occur and supported with legal binding aspect. Collective impairment calculation
For the purpose of a collective evaluation of impairment, financial asset are grouped on the basis of similar credit risk characteristics such by considering credit segmentation and past-
due status. Those characteristics are relevant to the estimation of future cash flows for groups of such assets which indicate debtors or counterparties’ ability to pay all amounts
due according to the contractual terms of the assets being evaluated.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2011 AND 2010
Expressed in millions of Rupiah, unless otherwise stated
Appendix 526 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
c. Financial instruments continued G. Allowance for impairment losses of financial assets continued
