PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2010, 2009 AND 2008
Expressed in millions of Rupiah, unless otherwise stated
Appendix 531 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
l. Securities PurchasedSold under ResaleRepurchase Agreements continued
Prior to 1 January 2010, the difference between the purchase price and the resale price is treated as deferred unamortised interest income and amortised as income over the period, commencing
from the acquisition date to the resale date by using straight-line method.
Securities sold under repurchase agreements are presented as liabilities in the consolidated balance sheet at the agreed repurchase price net of the unamortised prepaid interest. The
difference between the selling price and the agreed repurchase price is treated as prepaid interest and recognised as interest expense over the period, commencing from the selling date to the
repurchase date using effective interest rate method.
Securities sold under repurchase agreements are classified as financial liabilities at amortised cost. Refer to Note 2b for the accounting policy for financial liabilties at amortised cost.
Prior to 1 January 2010, the difference between the selling price and the repurchase price is treated as prepaid interest and is recognised as an expense over the period, commencing from the selling
date to the repurchase date by using straight-line method.
m. Derivative Receivables and Derivative Payables
All derivative instruments including foreign currency transactions for funding and trading purposes are recognised in the consolidated balance sheet at their fair values. Fair value is determined based
on market value using Reuters rate at reporting date or discounted cash flow method.
Derivative receivables are presented at the amount of unrealised gain from derivative contracts, less allowance for impairment losses. Derivative payables are presented at the amount of
unrealised loss from derivative contracts.
Gains or losses from derivative contracts are presented in the consolidated financial statements based on its purpose designated upon acquisition, as 1 fair value hedge, 2 cash flow hedge, 3
net investment in a foreign operation hedge, and 4 trading instruments.
1. Gain or loss on a derivative contract designated and qualifying as a fair value hedging
instrument and the gain or loss arising from the changes in fair value of hedged assets and liabilities is recognised as gain or loss that can be set off one another during the same
accounting periodyear. Any difference representing hedge ineffectiveness is directly recognised as gain or loss in the consolidated statement of income in current year.
2. The effective portion arising from gain or loss of derivative contracts, which are both designated
and qualify as a cash flow hedge instruments is reported as other comprehensive income, a separate component under the equity section. The hedge ineffectiveness portion is recognised
as a gain or loss in the current year consolidated statement of income.
3. Gain or loss arising from derivative contract that is designated, qualifies as a net investment
hedge in a foreign operation and that is highly effective is reported as other comprehensive income, a separate component under the equity section.
4. Gain or loss arising from derivative contract not designated as a hedging instrument or
derivative contract that does not qualify as a hedging instrument is recognised in the current year consolidated statement of income.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2010, 2009 AND 2008
Expressed in millions of Rupiah, unless otherwise stated
Appendix 532 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
m. Derivative Receivables and Derivative Payables continued
Derivative receivables are classified as financial assets at fair value through profit or loss, meanwhile derivative payables are classified as financial liabilities at fair value through profit or loss.
Refer to Note 2b for the accounting policy of financial assets and liabilities at fair value through profit or loss.
n. Loans
Loans represent agreement to provide cash or cash equivalent based on agreements with borrowers, where borrowers are required to repay their debts with interest after a specified period,
and matured trade finance facilities which have not been settled within 15 days.
Syndicated loans, direct financing and joint financing, and channeling loans are stated at their outstanding balances in proportion to the risks borne by the Bank and its Subsidiaries.
Included in loans are financing by Bank Syariah Mandiri, a Subsidiary, in the form of sharia financing which provides funds or cash equivalents, such as:
a profit sharing transactions in the form of mudharabah and musyarakah
b lease transactions in the form of ijarah or lease purchase based on ijarah muntahiyah bittamlik
c sale and purchase transactions in the form of receivables murabahah and istishna
d loanborrowing in the form of receivables qardh and
e lease transactions in the form of ijarah for multiservice transaction
based on agreement or approval between Bank Syariah Mandiri and other parties who have the responsibility to return the funds over a period of time with reward of ujroh, without reward, or profit
sharing.
Brief explanation for each type of sharia financing is as follows: Mudharabah is a placement of funds from lenders shahibul maal to fund managers mudharib to
undertake certain business activity by using profit sharing or net revenue sharing arrangement between both parties based on the ratio nisbah which has been agreed upfront.
Musyarakah is a placement of funds by fund owners to jointly place these funds in certain business activity with profit sharing scheme based on previously agreed nisbah. Loss is borne by the fund
owners according to proportion in the funds.
Ijarah is a leasing arrangement of goods andor services between the owner of a leased object lessor and leasee including the right to use the leased object, for the purpose of obtaining return
on the leased object. Ijarah muntahiyah bittamlik is a leasing arrangement between the lessor and the lessee to obtain profit on the leased object being leased with option to transfer ownership of the
leased object through purchasesale or giving hibah at certain time according to the lease agreement akad.
Murabahah is a financing in the form of salepurchase transaction with the selling price equal to cost of the goods plus agreed profit margin. Murabahah receivables are stated at amount of
receivables less realised deferred margin and allowance for impairment losses.
Istishna is a financing in the form of salepurchase of ordered goods with certain agreed criteria and conditions with payment terms in accordance with the agreement.
Qardh is a loanborrowing funds without any promising profit wherein the borrower return the principal of the loan at lump sum or on installment over certain period.
