Acceptance Receivables and Payables

PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2009, 2008 AND 2007 Expressed in millions of Rupiah, unless otherwise stated Appendix 521 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued r. Allowance for Possible Losses on Earning and Non-Earning Assets continued The outstanding balances of earning assets classified as loss are written off against the respective allowance for possible losses when the management of Bank Mandiri and Subsidiaries believes that the earning assets are uncollectible. Recoveries of earning assets previously written off are recorded as an addition to the allowance for possible losses during the year. If the recovery exceeds the principal amount, the excess will be recognised as interest income. In accordance with Bank Indonesia Regulation No. 72PBI2005 dated 20 January 2005 on “Asset Quality Ratings for Commercial Banks”, starting from 20 January 2006, the Bank is also required to make a special allowance for possible losses on non-earning assets, such as repossessed assets, abandoned properties, interbranch accounts and suspense accounts. This regulation classifies repossessed assets and abandoned properties into the following classification: Period Current Up to 1 year Substandard More than 1 year up to 3 years Doubtful More than 3 years up to 5 years Loss More than 5 years The classification for interbranch and suspense accounts are as follows: Period Current Up to 180 days Loss More than 180 days

s. Fixed Assets and Leased Assets

i. Fixed assets Prior to 1 January 2008, fixed assets are stated at cost except for certain fixed assets that were revalued in 1979, 1987 and 2003 in accordance with Government regulations less accumulated depreciation except for land which is not depreciated. The corresponding revaluation increments were credited to “Fixed Assets Revaluation Reserve” under the shareholders’ equity in the consolidated balance sheets. Effective 1 January 2008, Bank Mandiri applied SFAS No. 16 revised 2007, “Fixed Assets”, which supersedes SFAS No. 16 1994, “Fixed Assets and Other Assets”, and SFAS No. 17 1994, “Accounting for Depreciation”. Bank Mandiri and subsidiaries chose the cost model, and therefore, the balance of fixed assets revaluation reserve at the first time SFAS No. 16 revised 2007 was presented in shareholders’ equity section in the consolidated balance sheet, were reclassified to consolidated retained earnings in 2008 Note 32c. Fixed assets except for land is stated at cost less accumulated depreciation and impairment losses. Such cost includes the cost of replacing part of the fixed assets when that cost is incurred, if the recognition criteria are met. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the fixed assets as a replacement if the recognition criteria are satisfied. All other repairs and maintenance costs that do not have future economics benefit are recognised in the consolidated statement of income as incurred.