PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2016 and for the Year Then Ended
Figures in tables are expressed in billions of Rupiah, unless otherwise stated
30
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued u. Financial instruments continued
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 them on a net basis, or realize the assets and settle
the liabilities simultaneously. The right of set-off must not be contingent on a future event and must be legally enforceable in all of the following circumstances:
a. the normal course of business; b. the event of default; and
c. the event of insolvency or bankruptcy of the Group and all of the counterparties. iv. Fair value of financial instruments
Fair value is the amount for which an asset could be exchanged, or liability settled, in an arms’ length transaction.
The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices, without any deduction for transaction costs.
For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include
using recent arm’s length market transactions, reference to the current fair value of another instrument that is substantially
the same, a discounted cash flow analysis or other valuation models. An analysis of fair values of financial instruments and further details as to how they are
measured are provided in Note 37. v. Impairment of financial assets
The Group assesses the impairment of financial assets if there is objective evidence that a loss event has a negative impact on the estimated future cash flows of the financial assets.
Impairment is recognized when the loss event can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognized.
For financial assets carried at amortized cost, the Group first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial
assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it
includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment
and for which an impairment loss is, or continues to be, recognized are not included in the collective assessment of impairment.
The amount of any impairment loss identified is measured as the difference between
the asset’s carrying amount and the present value of estimated future cash flows excluding future expected credit losses that have not yet been incurred. The present value of the
estimated future cash flows is discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the
loss is recognized in profit or loss.
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2016 and for the Year Then Ended
Figures in tables are expressed in billions of Rupiah, unless otherwise stated
31
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued u. Financial instruments continued
v. Impairment of financial assets continued For available-for-sale financial assets, the Group assesses at each reporting date whether
there is objective evidence that an investment or a group of investments is impaired. When a decline in the fair value of an available-for-sale financial asset has been recognized in other
comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss that had been recognized in other comprehensive income is recognized in profit
or loss as an impairment loss. The amount of the cumulative loss is the difference between the acquisition cost net of any principal repayment and amortization and current fair value, less
any impairment loss on that financial asset previously recognized.
vi. Derecognition of financial instrument The Group derecognizes a financial asset when the contractual rights to the cash flows from
the financial asset expire, or when the Group transfers substantially all the risks and rewards of ownership of the financial asset.
The Group derecognizes a financial liability when the obligation specified in the contract is discharged or cancelled or has expired.
v. Treasury stock
Reacquired Company shares of stock are accounted for at their reacquisition cost and classified as “Treasury Stock” and presented as a deduction to equity. The cost of treasury stock soldtransferred
is accounted for using the weighted average method. The portion of treasury stock transferred for employees ownership program is accounted for at its fair value at grant date. The difference
between the cost and the proceeds from the saletransfer value of treasury stock is credited to
“Additional Paid-in Capital”.
w. Dividends
Dividend for distribution to the stockholders is recognized as a liability in the consolidated financial statements in the year in which the dividend is approved by the stockholders. The interim dividend
as a liability based on the Board of Directors’ decision supported by the approval from the Board of
Commissioners.
x. Basic and diluted earnings per share and earnings per ADS
Basic earnings per share is computed by dividing profit for the year attributable to owners of the parent company by the weighted average number of shares outstanding during the year. Income
per ADS is computed by multiplying the basic earnings per share by 100, the number of shares represented by each ADS.
The Company does not have potentially dilutive financial investments.
y. Segment information
The Groups segment information is presented based upon identified operating segments. An operating segment is a component of an entity: a that engages in business activities from which it
may earn revenues and incur expenses including revenues and expenses relating to transactions with other components of the same entity; b whose operating results are regularly reviewed by the
Groups chief operating decision maker i.e., the Directors, to make decisions about resources to be allocated to the segment and assess its performance, and c for which discrete financial information
is available.