PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED continued JUNE 30, 2009 AND 2010
SIX MONTHS PERIOD ENDED JUNE 30, 2009 AND 2010 Figures in tables are presented in millions of Rupiah, unless otherwise stated
22
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued g. Trade and other accounts receivable
Trade and other accounts receivable are recorded net of allowance for doubtful accounts which reviewed individually for collectability. Accounts are written-off against the allowance during the
period in which they are determined to be not collectible.
The allowance for doubtful accounts is the Company and its subsidiaries’ best estimate of the probable credit losses in the accounts receivable. The amount of the allowance is recognized in
the consolidated statement of income within operating expenses - general and administrative. The Company and its subsidiaries determine the allowance based on historical write-off
experience. The Company and its subsidiaries review the allowance for doubtful accounts every month. Past due balances are reviewed individually for collectability. Account balances are
written-off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
h. Inventories
Since January 1, 2009, the Company and its subsidiaries have adopted PSAK 14 Revised 2008, “Inventories”, which became effective for financial statement periods beginning on or after
January 1, 2009 and is applied prospectively. Inventories consist of components and modules, which are subsequently expensed or transferred
to property, plant and equipment upon use. Inventories also include Subscriber Identification Module “SIM” cards, Removable User Identity Module “RUIM” cards and prepaid voucher
blanks, which are expensed upon sale. Inventories are stated at the lower of cost and net realizable value.
Cost is determined using the weighted average method for components, SIM cards, RUIM cards and prepaid voucher blanks, and the specific-identification method for modules.
The amount of any write-down of inventories below cost to net realizable value and all losses of inventories is recognized as an expense in the period in which the write-down or loss occurs. The
amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, is recognized as a reduction in the amount of inventories expense in the period in which
the reversal occurs.
Allowance for obsolescence is primarily based on the estimated forecast of future usage of these items.
i. Prepaid expenses
Prepaid expenses are amortized over their future beneficial periods using the straight-line method.
j. Intangible assets
Intangible assets comprised of intangible assets from subsidiaries or business acquisition, licenses and computer software. Intangible assets shall be recognized if it is probable that the
expected future economic benefits that are attributable to each asset will flow to the Company and its subsidiaries and the cost of the asset can be reliably measured.
Intangible assets are stated at cost less accumulated amortization and impairment, if any. Intangible assets are amortized over their useful lives. The Company and its subsidiaries
estimate the recoverable value of their intangible asset. When the carrying amount of an asset exceeds its estimated recoverable amount, the asset is written-down to its estimated recoverable
amount.
PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED continued JUNE 30, 2009 AND 2010
SIX MONTHS PERIOD ENDED JUNE 30, 2009 AND 2010 Figures in tables are presented in millions of Rupiah, unless otherwise stated
23
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued j. Intangible assets continued
In 2006, Telkomsel was granted the right to operate the 3G license Note 14.iii. Telkomsel is required to pay an up-front fee and annual rights of usage “Biaya Hak Penggunaan” or “BHP”
fees for the next ten years Note 49c.i. The up-front fee is recorded as an intangible asset and amortized using the straight-line method over the term of the right to operate the 3G license
10 years. Amortization commenced in 2006 when the assets attributable to the provision of the related services became available for use.
Based on management interpretation of the license conditions and the written confirmation from the DGPT, the license may be returned at any time without any financial obligation to pay the
remaining outstanding annual BHP fees. Accordingly, Telkomsel recognizes the annual BHP fees as an expense when incurred. Management evaluates its plan to continue to use the license on
an annual basis.
k. Property, plant and equipment - direct acquisitions
The cost of the assets include: a purchase price, b any costs directly attributable to bringing the asset to its location and condition and c the initial estimate of the costs of dismantling and
removing the item and restoring the site on which it is located. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be
depreciated separately. The residual value and the useful life of an asset should be reviewed at least at each financial year-end.
Property, plant and equipment directly acquired are stated at cost, less accumulated depreciation and impairment losses.
Property, plant and equipment, except land, are depreciated using the straight-line method, based on the estimated useful lives of the assets as follows:
Years Buildings
20 Leasehold improvements
3-7 Switching equipment
5-15 Telegraph, telex and data communication equipment
5-15 Transmission installation and equipment
5-20 Satellite, earth station and equipment
3-15 Cable network
5-25 Power supply
3-10 Data processing equipment
3-10 Other telecommunications peripherals
5 Office equipment
2-5 Vehicles
5-8 Other equipment
5 Pursuant to PSAK 16R, starting January 1, 2008, the Company has changed the estimated useful
lives of fiber optic included in cable network assets from 15 years to 25 years. The Company charged the impact of the changes in the estimated useful lives to 2008 consolidated income
statements as it is not considered material.
The Company and its subsidiaries periodically evaluate its property, plant and equipment for impairment, whenever events and circumstances indicate that the carrying amount of the assets
may not be recoverable. When the carrying amount of an asset exceeds its estimated recoverable amount, the asset is written-down to its estimated recoverable amount, which is
determined based upon the greater of its net selling price or value in use.
