PT. TUNAS BARU LAMPUNG Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010 AND 2009 AND FOR THE SIX MONTHS PERIOD THEN ENDED Continued
- 6 - 5 Companies in which a substantial interest in the voting power is owned, directly or
indirectly, by any person described in 3 or 4 or over which such person is able to exercise significant influence. These included companies owned by commissioners,
directors or major stockholders of the Company, and companies that have a common member of key management with that of the Company.
All transaction with related parties, whether or not done under similar terms and conditions as those done with third parties are disclosed in the consolidated financial statements.
e. Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in Indonesia requires management to make estimates and assumption
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
f. Cash and Cash Equivalents
Cash consists of cash on hand and cash in banks. Cash equivalents consist of time deposit on call and Negotiable Certificates of Deposits
NCD. These cash equivalents are short-term, highly liquid investment that are readily convertible to known amounts of cash with original matures of three months or less from the
date of placements, and which are not used as collateral and are not restricted.
NCD’S with maturity less than three months are stated at its nominal amount net of unamortized interest received in advance. Such interest received in advance will be amortized
over the period of the NCD’s.
g. Account Receivable
Accounts receivable are stated at net realized value, after providing an allowance for doubtful accounts. Accounts receivable deemed uncollectible are written off.
An allowance for doubtful account is provided based on management’s evaluation of the collectability of the individual receivable accounts at the end of the year.
h. Inventories
Inventories are stated at cost or net realizable value, whichever is lower. Cost is determined using the moving average method. Net realizable value is the estimated selling price in the
ordinary course of business, less estimated cost of completion and the estimated cost necessary to make the sale. Allowances for inventory obsolescence and decline in value of
the inventories are provided to reduce the carrying value of inventories to their net realizable values.
i. Prepaid Expenses
