PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2005 and 2004 Expressed in rupiah, unless otherwise stated
13
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued j. Impairment of Assets
The recoverable amount of an asset is estimated whenever events or changes in circumstances indicate that its carrying amount may not be fully recoverable. Impairment in asset value, if any, is
recognized as a loss in the current year’s statement of income.
k. Leases
Lease transactions are accounted for under the capital lease method when the required capitalization criteria under PSAK No. 30, “Accounting for Leases”, are met. Otherwise, lease
transactions are accounted for under the operating lease method. Assets under capital lease presented as part of “Fixed Assets” in the consolidated balance sheets are recorded based on the
present value of the lease payments at the beginning of the lease term plus residual value option price to be paid at the end of the lease period. Depreciation of leased assets is computed based on
the methods and estimated useful lives used for similar fixed assets acquired under direct ownership.
Gain on sale-and-leaseback transactions is deferred and amortized using the same basis and methods as mentioned above.
Obligations under capital lease are presented at the present value of the remaining lease payments to be made.
l. Capitalization of Borrowing Costs
In accordance with revised PSAK No. 26, “Borrowing Costs”, interest charges and foreign exchange differences incurred on borrowings and other related costs to finance
the construction or installation of major facilities are capitalized. Capitalization of these borrowing costs ceases when the construction or installation is completed and the related asset is ready for its
intended use. In 2005 and 2004, no borrowing costs were capitalized.
m. Deferred Charges
In accordance with PSAK No. 47, “Accounting for Land”, costs incurred in connection with the acquisitionrenewal of landrights, such as legal fees, land remeasurement fees, notarial fees, taxes
and other expenses, are deferred and amortized using the straight-line method over the legal terms of the related landrights.
n. Revenue and Expense Recognition
Revenues are recognized when the products are delivered and the risks and benefits of ownership are transferred to the customers andor when the services are rendered. Costs and expenses are
generally recognized and charged to operations when they are incurred.
PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2005 and 2004 Expressed in rupiah, unless otherwise stated
14
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued o. Provision for Employee Benefits
