PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2013 and for the Year Then Ended
Figures in tables are expressed in billions of rupiah, unless otherwise stated
33
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued u. Financial instruments
The Company and subsidiaries classify financial instruments into financial assets and financial liabilities. Financial assets and liabilities are recognized initially at fair value including transaction
costs. These are subsequently measured either at fair value or amortized cost using the effective interest rate method in accordance with their classification.
i. Financial assets
The Company and subsidiaries classify their financial assets as i financial assets at fair value through profit or loss, ii loans and receivables, iii held-to-maturity financial assets or
iv available-for-sale financial assets. The classification depends on the purpose for which the financial assets are acquired. Management determines the classification of financial assets at
initial recognition.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace regular way trades are
recognized on the trade date, i.e., the date that the Company and subsidiaries commit to purchase or sell the assets.
The Company’s financial assets include cash and cash equivalents, other current financial assets, trade receivables and other receivables, long-term investments, advances and other
non-current financial assets.
a. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets classified as held
for trading. A financial asset is classified as held for trading if it is acquired principally for the purpose of selling or repurchasing it in the near term and for which there is evidence
of a recent actual pattern of short-term profit taking. Gains or losses arising from changes in fair value of the trading securities are presented as other expensesincome in
consolidated statement of comprehensive income in the period in which they arise. Financial asset measured at fair value through profit loss consists of derivative asset-put
option which is recognized as part of other current financial assets.
b. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Loans and receivables consist of, among other things, cash and cash equivalents, trade receivables, other receivables,
other current financial assets and other non-current financial assets.
These are initially recognized at fair value including transaction costs and subsequently measured at amortized cost, using the effective interest method.
c. Held-to-maturity financial assets Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturities that management has the positive intention and ability to hold to maturity, other than:
a those that the Company upon initial recognition designates as assets at fair value through profit or loss;
b those that the Company designates as available for sale; and c those that meet the definition of loans and receivables.
No financial assets were classified as held-to-maturity financial assets as of December 31, 2013 and 2012.
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2013 and for the Year Then Ended
Figures in tables are expressed in billions of rupiah, unless otherwise stated
34
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued u. Financial instruments continued
i. Financial assets continued
d. Available-for-sale financial assets Available-for-sale investments are non-derivative financial assets that are intended to be
held for indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or that are not classified as loans and
receivables, held-to-maturity investments or financial assets at fair value through profit or loss. Available-for-sale financial assets consist of bonds and mutual funds which are
recorded as other current financial assets.
Available-for-sale securities are stated at fair value. Unrealized holding gains or losses on available-for-sale securities are excluded from income of the current period and are
reported as a separate component in the equity section of the consolidated statements of financial position until realized. Realized gains or losses from the sale of available-for-sale
securities are recognized in the consolidated statements of comprehensive income, and are determined on the specific identification basis. A decline in the fair value of any
available-for-sale securities below cost that is deemed to be other than temporary is charged to the consolidated statement of comprehensive income.
ii. Financial liabilities The Company and subsidiaries classify their financial liabilities as i financial liabilities at fair
value through profit or loss or ii financial liabilities measured at amortized cost. The Company and subsidiaries’ financial liabilities include trade payables and other payables,
accrued expenses, loans and other borrowings which consist of short-term bank loans, obligations under capital lease, two step loans, bonds and notes, and bank loans.
a. Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss are financial liabilities classified as
held for trading. A financial liability is classified as held for trading if it is incurred principally for the purpose of selling or repurchasing them in the near term and for which
there is evidence of a recent actual pattern of short-term profit taking.
No financial liabilities were categorized as held for trading as of December 31, 2013 and 2012.
b. Financial liabilities measured at amortized cost Financial liabilities that are not classified as liabilities at fair value through profit or loss fall
into this category and are measured at amortized cost. Financial liabilities measured at amortized cost are trade payables, other payables, accrued expenses, loans, bonds and
notes.
iii. Offsetting financial instruments Financial assets and liabilities are offset and the net amount is reported in the consolidated
statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the assets
and settle the liabilities simultaneously.
