g. Financial Instrument continued Financial Liabilities continued
• Measurement after initial recognition
The Company and its Subsidiaries classify its financial liabilities as debt and payable. Debt and payable
After initial recognition, debt and interest bearing payable are subsequently measured at amortized cost using the effective interest rate method.
Gains and losses are recognized in the consolidated income statements when the liability is derecognized through the amortization process.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the consolidated balance sheet if, and only if, currently owns the rights to perform legal power to offset the amount that has been recognized and there is an intention to
settle on a net basis, or to realize its assets and settle their liabilities simultaneously.
Amortized cost of the financial instruments
Cost amortized calculated using the effective interest method less any allowance for impairment in value and payment of principal or value that can not be billed. The calculation is considered a premium or discount on acquisition and includes
transaction fees and expenses which are an integral part of the effective interest rate.
Impairment of financial assets
At the end of each reporting period the Company and its Subsidiaries evaluate whether there is objective evidence that financial assets or group of financial assets are impaired.
• Financial assets that recorded at amortized cost
For loans and receivables that recorded at amortized cost, the Company and its Subsidiaries first determine whether there is objective evidence of individual impairment of individually significant financial assets, or collectively for financial
assets with insignificant balance individually. If the Company and its Subsidiaries determine that there is no objective evidence on impairment of financial assets, which are assessed individually, regardless whether financial assets is
significant or not, then they classify the assets into a group of financial assets that has similar credit risk characteristics and assess the impairment in that group collectively. Asset, which is impaired individually, an the impairment loss is
recognized or still recognized, is not included in the impairment assessment collectively.
If there is objective evidence that an impairment has occurred, the losses are measured as the difference between the carrying value of assets with a present value of estimated future cash flows excluding future expected credit losses
that have not happened. The present value of estimated future cash flows is discounted using the initial effective interest rate of the financial assets if the loans and receivables which have variable interest rates, the discount rate for
measuring any impairment loss is the current effective interest rate.
The carrying value of the asset is reduced through use of the allowance account and the loss recognized in the consolidated income statements. Interest income is recognized based on the carrying value of which has been reduced,
based on the effective interest rate of the asset. Loans and receivables, together with related provisions, will be written off when there is no realistic possibility of recovery in the future and all collateral has been realized or have been
transferred to the Company and its Subsidiaries. If, on the future period, the impairment loss is increased or decreased because of an event occurring after the impairment is recognized, the impairment losses previously recognized
increased or decreased by adjusting the allowance account. If the impairment is then restored, then the recovery is recognized in the income statement.
02 02
02 02
PT. ERATEX DJAJA Tbk 2010 Annual Report
039 038
PT. ERATEX DJAJA Tbk 2010 Annual Report
PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
continued
For the years ended December 31, 2010 and 2009 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated
PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
continued
For the years ended December 31, 2010 and 2009 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
g. Financial Instrument continued Derecognition of financial assets and liabilities