PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2010, 2009 AND 2008
Expressed in millions of Rupiah, unless otherwise stated
Appendix 534 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
n. Loans continued
Loan Restructuring continued For loan restructurings which involve a conversion of loans into equity or other financial instruments,
a loss on loan restructuring is recognised only if the fair value of the equity or financial instruments received, deducted by estimated expenses to sell the equity or other financial instruments, is less
than the carrying amount of loans.
Overdue interest, which is capitalised to loans under new restructuring agreements, is recorded as deferred interest income and is amortised proportionately based on the amount of capitalised
interest relative to the loan principal upon collection. Losses on loan restructuring are presented as part of allowance for impairment losses.
o. Consumer Financing Receivables
Subsidiary’s consumer financing receivables are recognised initially at fair value plus directly attributable transaction costs and deducted by administration income and subsequently measured
at amortised cost using the effective interest rate method.
Early termination of a contract is treated as a cancellation of an existing contract and the resulting gain or loss is credited or charged to the current year’s consolidated statement of income at the
date of transaction.
Subsidiary’s consumer financing receivables are classified as financial assets in loans and receivables. Refer to Note 2b for the accounting policy of loans and receivables.
Prior to 1 January 2010, consumer financing receivables represented receivables net of unearned income on consumer financing, allowance for doubtful accounts and amount jointly financed by
other parties. Transaction costs, administration income and discount insurance were charged and credited directly to the consolidated statement of income.
Subsidiary’s unearned consumer financing income is the difference between total installments to be received from customers and total financing plus or deducted with transaction costs and discount
insurance which will be recognised as consumer financing income over the term of the contract using effective interest rate.
Joint financing
Joint financing consists of with and without recourse joint financing to end-user consumers. The consumer financing receivables under joint financing where each party assumes the credit risk
according to the risk portion without recourse are stated at net amount in the consolidated balance sheet. Consumer financing income and interest expense related to without recourse joint financing
are stated at net amount in the consolidated statement of income. Consumer financing receivables under joint financing where the Subsidiary assume the credit risk with recourse are stated at gross
amount in the consolidated balance sheet and the funds received from are presented as borrowings in the consolidated balance sheet in accordance with their portion. The consumer financing income
and interest expense related to with recourse joint financing are stated at gross amount in the consolidated statement of income.
For joint financing without recourse, Subsidiary has the right to set higher interest rates to customers than those as stated in the joint financing agreements with joint financing providers
which is the Bank. The difference is recognised as revenue and disclosed as “Consumer Financing Revenue”.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2010, 2009 AND 2008
Expressed in millions of Rupiah, unless otherwise stated
Appendix 535 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
p. Fixed Assets and Leased Assets
i. Fixed assets Prior to 1 January 2008, fixed assets are stated at cost except for certain fixed assets that were
revalued in 1979, 1987 and 2003 in accordance with Government regulations less accumulated depreciation except for land which is not depreciated. The corresponding revaluation increments
were credited to “Fixed Assets Revaluation Reserve” under the shareholders’ equity in the consolidated balance sheets.
Effective 1 January 2008, Bank Mandiri applied SFAS No. 16 Revised 2007, “Fixed Assets”, which supersedes SFAS No. 16 1994, “Fixed Assets and Other Assets”, and SFAS No. 17
1994, “Accounting for Depreciation”. Bank Mandiri and subsidiaries chose the cost model, and therefore, the balance of fixed assets revaluation reserve at the first time SFAS No. 16 Revised
2007 was presented in shareholders’ equity section in the consolidated balance sheet, were reclassified to consolidated retained earnings in 2008 Note 33c.
Fixed assets except for land is stated at cost less accumulated depreciation and impairment losses. Such cost includes the cost of replacing part of the fixed assets when that cost is incurred,
if the recognition criteria are met. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the fixed assets as a replacement if the recognition criteria
are satisfied. All other repairs and maintenance costs that do not have future economics benefit are recognised in the consolidated statement of income as incurred.
Depreciation and amortisation is calculated using the straight-line method over the estimated useful lives of the assets as follows:
Years Buildings
20 Furniture, fixtures, office equipment and computer equipmentsoftware and vehicles
4-5 Fixed assets are derecognised upon disposal or when no future economic benefits are expected
from their use or disposal. Any gain or loss arising from derecognition of the asset calculated as the difference between the net disposal proceeds and the carrying amount of the asset is
included in consolidated statement of income in the year the asset is derecognised.
The asset’s residual values, useful lives and methods of depreciation are reviewed, and adjusted prospectively if appropriate, at each financial year end.
Construction in progress is stated at cost and is presented as part of fixed assets. Accumulated costs are reclassified to the appropriate fixed assets account when the assets are substantially
complete and are ready for their intended use.
In accordance with SFAS No. 47, “Accounting for Land”, all cost and expense incurred in relation with the acquisition of the landright, such as license fee, survey and measurement cost, notary
fee and taxes, are deferred and presented separately from the cost of the landright. The deferred cost related to the acquisition of the landright was presented as part of Other Asset in the
consolidated balance sheet, and amortised over the period of the related landright using straight- line method.
In addition, SFAS No. 47 also states that landright is not amortised unless it meet certain required conditions.
SFAS No. 48, “Impairment of Assets” states that the carrying amounts of fixed assets are reviewed at each balance sheets date to assess whether they are recorded in excess of their
recoverable amounts and, when carrying value exceeds this estimated recoverable amount, assets are written down to their recoverable amount.
