Securities purchasedsold under resalerepurchase agreements

PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the year then ended Expressed in millions of Rupiah, unless otherwise stated 53 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued p. Consumer financing receivables continued Early termination is treated as a cancellation of an existing contract and the resulting gain or loss is credited or charged to the current year’s consolidated statement of profit or loss and other comprehensive income at the transaction date. Credit restructuring can be done by over contract, asset replacement, repay back, change the due date, change the tenor andor increase the down payment. Subsidiary’s unearned consumer financing income is the difference between total installments to be received from customers and the total financing which is recognised as income over the term of the contract using effective interest rate. Consumer financing receivables are stated net of joint financing receivables where joint financing providers bear credit risk in accordance with its portion without recourse, unearned consumer financing income and allowance for impairment losses. Joint financing receivables where jointly financed with other parties, bear credit risk in accordance with their financing portion without recourse and presented on a net basis in the consolidated statement of financial position. Consumer financing income and interest expense related to joint financing without recourse are also presented on a net basis in the consolidated statement of profit or loss and other comprehensive income. For joint financing without recourse, Subsidiary has the right to set higher interest rates to customers than those as stated in the joint financing agreements with joint financing providers. The difference is recognised as revenue and disclosed as “Consumer financing income”.

q. Net investment in lease financing

Net investment in lease financing represent lease receivable plus the residual value which is earned at the end of the lease period and net of unearned lease income, security deposits and the allowance for impairment losses. The difference between the gross lease receivable and the present value of the lease receivable is recognised as unearned lease income. Unearned lease income is allocated to current year consolidated statement profit or loss and other comprehensive income based on a constant rate of return on net investment using the effective interest rate. The lessee has the option to purchase the leased asset at the end of the lease period at a price mutually agreed upon at the commencement of the agreement. Early termination is treated as a cancellation of an existing contracts and the resulting gain or loss is recognized in the current year consolidated statement of profit or loss and other comprehensive income. Net investment in lease financing are classified as loans and receivables. Refer to Note 2c to the accounting policy for loans and receivables.