Property and Equipment Loans and Receivables

PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2011 and 2010 and For the Years then Ended - 44 - Murabahah and revenue from “ijarah muntahiyah bittamlik” are recognized over the contract period on an accrual basis. Revenues for the results of financing are recognized when received or within the period of entitlement based on profit sharing portion ratio agreed. 2. Recognition of Underwriting Income and Expenses Underwriting Income Premiums on insurance and reinsurance contracts are recognized as revenue over the policy contract period in proportion to the insurance coverage provided. Premiums from co-insurance are recognized as income based on the subsidiary’s proportionate share in the premium. Premium due to the reinsurance company is recognized as reinsurance premium during the period of reinsurance contract in proportion to the insurance coverage received. Unearned premiums for each type of coverage are calculated in aggregate using a certain percentage in accordance with Decree of the Minister of Finance of the Republic of Indonesia No. 424KMK.062003, dated September 30, 2003. The increase or decrease in unearned premiums represents the difference between the balances of unearned premiums in the current year and the prior year, and is charged to or credited in the consolidated statement of comprehensive income of the current year. The subsidiary reinsured part of its total accepted risk to other insurance and reinsurance companies. The amount of premium paid or part of premium for prospective reinsurance transactions is recognized as reinsurance premiums within the reinsurance contract period, in proportion to the insurance coverage provided. Payment or obligation for retrospective reinsurance transactions is recognized as reinsurance receivable in an amount equivalent to the recorded liability in connection with the reinsurance contract. Underwriting Expenses Claims and benefits consist of settled claims, claims in process, including claims incurred but not yet reported, and claims settlement expenses. Claims are recognized as expense when the obligation to settle the claims are incurred. Parts of claims recovered from reinsurers are recorded and recognized as deduction from claims expenses in the same period when claims expenses are recognized. Subrogation rights are recognized as deduction from claims expenses when realized. Claims in process estimated own retention claims are computed based on estimated loss from own retention claims that are in process at statement of financial position date, including claims incurred but not yet reported. The changes in estimated own retention claims are recognized in the consolidated statements of income at the time of change. The increase or decrease in estimated own retention claims represents the difference between the estimated own retention claims for the current year and the prior year. Estimated claims liability for death insurance, health and personal accident insurance are provided based on actuary computations. 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.