PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2004 and 2003 Expressed in rupiah, unless otherwise stated
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued o. Provision for Employee Benefits
The Company has a defined contribution retirement plan Pension Plan covering all of its qualified permanent employees and an unfunded employee benefit liability in accordance with the existing
Company’s Collective Labor Agreement CLA . The provision for the CLA has been calculated by comparing the benefit that will be received by an employee at normal pension age from the Pension
Plan with the benefit as stipulated in the CLA after deducting the accumulat ed employee contribution and the related investment results. If the employer -funded portion of the Pension Plan
benefit is less than the benefit as required by the CLA, the Company provides for such shortage. Prior to January 1, 2004, the Company determined its employee benefit liability under the CLA
based on an actuarial valuation and amortized unrecognized past service costs over the estimated average remaining years of service of qualified employees .
On the other hand, the Subsidiaries do not maintain any pension plan for the benefit of their employees. However, retirement benefit expenses for those Subsidiaries are accrued based on
Labor Law No. 132003 dated March 25, 2003 “the Law”. Effective January 1, 2004, the Company decided to early adopt PSAK No. 24 Revised 2004 -
Employee Benefits, on a retrospective basis and changed its previous accounting method for employee benefits to the method required under this revised PSAK.
Under PSAK No. 24 Revised 2004, the cost of providing employee benefits under the CLALaw is determined using the projected unit credit actuarial valuation method. Actuarial gains and losses are
recognized as income or expense when the net cumulative unrecognized actuarial gains and losses for each individual plan at the end of the previous reporting year exceeds the higher of 10 of the
present value of defined benefit obligation and the fair value of plan assets at that date. These gains or losses are amortized on a straight-line basis over the expected average remaining working lives
of the employees. Further, past service costs arising from the introduction of a defined benefit plan or changes in the benefit payable of an existing plan are required to be amortized over the period
until the benefits concerned become v ested.
Since the difference between the benefits under this revised PSAK and the benefits previously recognized prior to 2004 is immaterial, the Company recorded the difference in the 2004
consolidated statement of income see Note 20.
p. Foreign Currency Transactions and Balances
