Impairment of Non-Financial Assets

PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2011 and 2010 and For the Years then Ended - 45 - Commissions due to insurance brokers, agents and other insurance companies in connection with the insurance coverage are recorded as commission expense, whereas commissions obtained from reinsurance transactions are recorded as deduction from commission expense, and are recognized in the consolidated statements of comprehensive income when incurred. If commission income is more than the total commission expense, the difference is presented as commission income in the consolidated statement of comprehensive income of the current year. 3. Recognition of Shares Administration, Underwriting and Stock Brokerage Fees and Investment Management Income Shares administration fees, stock brokerage fees and underwriting fees are recognized as income when the services for trading of securities in the stock exchange and underwriting activities are performed. Investment management income is recognized based on agreed conditions as stated in the “Collective Investment Contract”. 4. Recognition of Other Revenue and Expenses Fees and Commissions Related to Financial Instruments Commission income and expense fees associated with the acquisition of financial instruments categorized as held to maturity, loans and receivables, and available for sale, or related to a period of time and that the amount is significant, is recorded as part of the fair value of financial assets or financial liability and amortized over the period using the effective interest rate. Meanwhile, fees and commissions that are not significant in amounts are recognized as revenue when the revenue is received or expense at the time of payment. Other Fees and Commission Fees and commissions that are not related to the issuance or acquisition of financial instruments and have maturity terms in which amounts are significant, are treated as deferred income or expenses and amortized using the straight-line method over the term of the relevant transaction. Meanwhile, revenue and expense fees and commissions that are not significant are recognized immediately as income or expenses on the transaction. Other fees and commission revenues not related to credit, such as bancaassurance services, and revenues associated with import and export bank guarantee, are recognized as revenue associated with the services provided. Other Income and Expense Income from assets for lease operating lease is recognized using the straight-line method over the lease period Note 2m. Administration income incurred in relation with lease, consumer finance, and factoring transaction are recognized when earned. Other income expense are recognized when earned incurred and in accordance with their beneficial period accrual basis. PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2011 and 2010 and For the Years then Ended - 46 - ac. Accounting for Insurance under Sharia Principles In the insurance accounting system of branch using Sharia principles, a subsidiary separates the funds belonging to the stockholders from those to “Takaful” participants. The reporting of the “takaful” participants’ fund reflects the financial position, result of operations and the participants’ surplus or deficit. The allocation of profit sharing mudharabah on the underwriting surplus and investment income is distributed to participants who never make any claims during the insurance period. ad. Employee Benefits Short-term employee benefits Short-term employee benefits are in the form of wages, salaries and social security Jamsostek contribution and bonuses. Short-term employee benefits are recognized at its undiscounted amount as a liability, after deducting any amount already paid, in the consolidated statement of financial position, and as an expense in the consolidated statements of comprehensive income. Post-employment benefits Post-employment benefits are an unfunded defined-benefit plans which amounts are determined based on years of service and salaries of the employees at the time of pension. The actuarial valuation method used to determine the present value of defined-benefit reserve, related current service costs and past service costs is the Projected Unit Credit. Current service costs, interest costs, vested past service costs and effects of curtailments and settlements if any are charged directly to current operations. Past service costs which are not yet vested and actuarial gains or losses for working active employees are amortized during the employees’ average remaining years of service, until the benefits become vested. ae. Income Tax Current tax expense is determined based on the taxable income for the year computed using prevailing tax rates. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized for deductible temporary differences to the extent that it is probable that taxable income will be available in future periods against which the deductible temporary differences can be utilized. Deferred tax is calculated at the tax rates that have been enacted or substantively enacted at statement of financial position date. Deferred tax is charged to or credited in the consolidated statements of income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also charged to or credited directly in equity. Deferred tax assets and liabilities are offset in the consolidated statement of financial positions, except if these are for different legal entities, in the same manner the current tax assets and liabilities are presented. Amendments to tax obligations are recorded when an assessment is received or, if appealed against by the Group, when the result of the appeal is determined.