Other Deferred Charges Bonds Issuance Costs Stock Issuance Costs Impairment of Assets
PT. TUNAS BARU LAMPUNG Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30,2005 AND 2004 AND FOR THE SIX MONTHS PERIOD THEN ENDED Continued
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Construction in Progress Construction in progress represents property, plant and equipment under construction
which is stated at cost, and is not depreciated. The accumulated costs will be reclassified to respective property, plant and equipment account when the construction is
substantially complete and the assets is ready for its intended use.
Property for Lease
Property for lease, consisting of vessels, are stated at cost less accumulated depreciation. Depreciation is computed using straight-line method based on the
estimated useful life of 15 years. Rental income is presented net of all expenses incurred related to the property for lease, including depreciation expenses, under the “ Other
income Expenses “ account in the consolidated statements of income.
Property Not Used in Operations
Property not used in operations are presented in a separate account under non current assets and are stated at the lower of carrying value or net realizable value.
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Leases
Lease transactions are recorded as capital leases when the following criteria are met: 1
The lessee has the option to purchase the leased asset at the end of the lease term at a price mutually agreed upon at the inception of the lease agreement.
2 All periodic lease payments made by the lessee plus residual value shall represent
a return of the cost of leased asset and interest thereon as the profit of the lessor. 3
Minimum lease period is two years. Lease transactions that do not meet the above criteria are recorded as operating leases.
A capital lease transaction is treated and recorded as leased assets which are presented as part of the “Property, plant and equipment” account in the balance sheets
and lease liabilities which are presented in “ Leased liabilities “ account in the balance sheets at the inception of the lease term. Leased assets and lease liabilities under the
capital lease method are recorded at the present value of the total lease installment payments plus residual value option price which should be paid by the lessee at the
end of lease term. During the lease term, each lease payment is allocated and recorded as repayment of the lease liabilities and interest expenses thereon based on an interest
rate applied to the carrying amount of the related lease liabilities.
Leased assets are depreciated using the same method and estimated useful lives used for directly acquired property, plant and equipment see accounting policy for property,
plant and equipment – direct acquisition .