PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2005 and 2004 Expressed in rupiah, unless otherwise stated
11
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued b. Principles of Consolidation continued
The Company also has five 5 other subsidiaries, all with effective percentages of ownership of 99.99. The total cost of investments in these entities amounted to Rp20,000,000.
Since these entities have no activities and the total cost of the investments in these subsidiaries is immaterial, their accounts were no longer consolidated into the consolidated financial statements.
Instead, the investments in these subsidiaries are presented as part of “Long-term Investments and Advances to Associated Companies” in the consolidated balance sheets. The details of these
subsidiaries are as follows:
Year of Country of
Total Assets as of Incorporation
Domicile September 30, 2005
PT Bhakti Sari Perkasa Abadi 1998
Indonesia 5,000,000
PT Lentera Abadi Sejahtera 1998
Indonesia 5,000,000
PT Mandiri Sejahtera Sentra 1998
Indonesia 5,000,000
PT Sari Bhakti Sejati 1998
Indonesia 5,000,000
PT Makmur Abadi Perkasa Mandiri 1998
Indonesia -
All significant intercompany accounts and transactions have been eliminated. Investments in associated companies wherein the Company or its Subsidiaries have ownership
interests of at least 20 but not exceeding 50 are accounted for under the equity method, whereby the costs of such investments are increased or decreased by the Company’s or
Subsidiaries’ share in the net earnings losses of the investees since the date of acquisition and are reduced by cash dividends received by the Company or Subsidiaries from the investees. The
share in net earnings losses of the investees is adjusted for the straight-line amortization, over a twenty-year period in view of the good future business prospects of the investees, of the difference
between the costs of such investments and the Company’s or Subsidiaries’ proportionate share in the book value of the underlying net assets of investees at date of acquisition goodwill.
A subsidiary’s investment in an associated company which uses the U.S. dollar as its functional and reporting currency is translated into rupiah using the exchange rate prevailing at balance sheet
date, while the equity in the net earnings losses of the associated company is translated using the average rate during the year. Exchange differences arising from the translation of the investment
are recorded by the Company as “Differences Arising from Changes in the Equity of Subsidiaries” account which is presented under the Stockholders’ Equity section of the consolidated balance
sheets.
All other investments are carried at cost. In compliance with PSAK No. 38 Revised 2004, “Accounting for Restructuring Transactions
Among Entities under Common Control”, the differences between the costproceeds of net assets acquireddisposed in connection with restructuring transactions among entities under common
control compared to their net book values are recorded and presented as “Differences Arising from Restructuring Transactions Among Entities under Common Control” under the Shareholders’ Equity
section of the consolidated balance sheets.
In compliance with PSAK No. 40, “Accounting for Changes in the Value of Equity of a Subsidiary Associated Company”, the difference between the carrying amount of the Company’s investment in,
and the value of the underlying net assets of, the subsidiaryinvestee arising from changes in the latter’s equity which are not resulting from transactions between the Company and the concerned
subsidiaryinvestee, is recorded and presented as “Differences Arising from Changes in the Equity of Subsidiaries” under the Shareholders’ Equity section of the consolidated balance sheets.
Accordingly, the resulting difference arising from the changes in equity of PT Indomix Perkasa in connection with its application of the provisions of PSAK No. 50, “Accounting for Investments in
Certain Securities”, is recorded and presented under this account see item d below.
PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2005 and 2004 Expressed in rupiah, unless otherwise stated
12
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued c. Cash Equivalents
