PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of June 30, 2014 and for the Six Months Period Then Ended unaudited
Figures in tables are expressedin billions of rupiah, unless otherwise stated
23 The functional currency of PT Pasifik Satelit Nusantara “PSN” and PT Citra Sari Makmur
“CSM” is the United States dollar “U.S. dollars” and the functional currency of Telin Malaysia is the Malaysian ringgit “MYR”. For the purpose of reporting these investments using the equity
method, the assets and liabilities of these companies as of the statement of financial position date are translated into Indonesian rupiah using the rate of exchange prevailing at that date, while
revenues and expenses are translated into Indonesian rupiah at the average rates of exchange for the year. The resulting translation adjustments are reported as part of translation adjustment in the
equity section of the consolidated statement of financial position.
g. Trade and other receivables
Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost, less provision for impairment. This provision for impairment is made based on
management’s evaluation of the collectibility of outstanding amounts. Receivables are written off in the year during which they are determined to be uncollectible.
h. Inventories
Inventories consist of components, which are subsequently expensed or transferred to property and equipment upon use. Components represent telephone terminals, cables, and other spare
parts. Inventories also include Subscriber Identification Module “SIM” cards, Removable User Identity Module “RUIM” cards, handsets, set top box, wireless broadband modems, and blank
prepaid vouchers, which are expensed upon sale.
h. Inventories continued
The costs of inventories comprise of the purchase price, import duties, other taxes, transport, handling, and other costs directly attributable to their acquisition. Inventories are recognized at the
lower of cost and net realizable value. Net realizable value is the estimate of selling price less the costs to sell.
Cost is determined using the weighted average method for components, SIM cards, RUIM cards, handsets, set top box, wireless broadband modem, and blank prepaid voucher.
The amounts of any write-down of inventories below cost to net realizable value and all losses of inventories are recognized as 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 general and administrative expenses in the
year in which the reversal occurs.
Provision 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. Assets held for sale
Assets or disposal groups are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction rather than through continuing use and a sale is
considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell. Assets that meet the criteria to be classified as held for sale are reclassified from
property and equipment and depreciation on such assets is ceased.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued k. Intangible assets
Intangible assets consist of goodwill arising from business acquisitions, license and software.
