Property, plant and equipment under capital leases

PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued DECEMBER 31, 2004 AND 2005, AND FOR YEARS ENDED DECEMBER 31, 2004 AND 2005 Figures in tables are presented in millions of Rupiah, unless otherwise stated - 25

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

n. Joint operation schemes continued

MTR are recognized on a monthly basis, based upon the contracted MTR amount for the current year, in accordance with the KSO agreement. The Companys share of DKSOR is recognized on the basis of the Companys percentage share of the KSO revenues, net of MTR and operational expenses of the KSO Units, as provided in the KSO agreements. Under PSAK No. 39, “Accounting for Joint Operation Schemes”, which supersedes paragraph 14 of PSAK No. 35, “Accounting for Telecommunication Services Revenue”, the assets built by the KSO Investors under the Joint Operation Schemes are recorded in the books of the KSO Investors which operate the assets and are transferred to the Company at the end of the KSO period or upon termination of the KSO agreement.

o. Deferred charges for landrights

Costs incurred to process and extend the landrights are deferred and amortized using the straight- line method over the term of the landrights.

p. Revenue and expense recognition

i. Fixed line telephone revenues Revenues from fixed line installations are recognized at the time the installations are placed in service. Revenues from usage charges are recognized as customers incur the charges. ii. Cellular and fixed wireless telephone revenues Revenues from service connections connection fees are recognized as income at the time the connections occur. Revenues from airtime for cellular and monthly subscription charges are recognized as accessed and as earned. Revenues from prepaid card customers, which consist of the sale of starter packs, also known as SIM cards in the case of cellular and RUIM in the case of fixed wireless telephone, and pulse reload vouchers, are recognized as follows: 1. Sale of starter packs is recognized as revenue upon delivery of the starter packs to distributors, dealers or directly to customers. 2. Sale of pulse reload vouchers is recognized initially as unearned income and recognized proportionately as revenue based on successful calls made by the subscribers or whenever the unused stored value of the voucher has expired.