PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Six months ended June 30, 2008 and 2007 Expressed in rupiah, unless otherwise stated
16
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued q. Derivative
Instruments
PSAK No. 55, “Accounting for Derivative Instruments and Hedging Activities”, established the accounting and reporting standards which require that every derivative instrument including
certain derivatives embedded in other contracts be recorded in the balance sheets as either an asset or a liability measured at its fair value. PSAK No. 55 requires that changes in the derivative’s
fair value be recognized currently in earnings unless specific hedges allow a derivative’s gain or loss to offset related results on the hedged item in the statements of income. PSAK No. 55 also
requires that an entity formally document, designate and assess the effectiveness of transactions that are accounted for under the hedge accounting treatment.
The accounting for changes in the fair value of a derivative depends on the documented use of the derivative and the resulting designation. The Company has entered into forward currency contract
and cross currency interest rate swap to hedge market risks arising from fluctuations in exchange rates relating to its foreign currency denominated loans. However, based on the specific
requirements for hedge accounting under PSAK No. 55, the said instruments can not be designated as hedge activities for accounting purposes and accordingly, changes in the fair value
of such instruments are recorded directly in earnings.
r. Corporate Income Tax
Current tax expense is provided based on the estimated taxable income for the year. Deferred tax assets and liabilities are recognized for temporary differences between the financial and the tax
bases of assets and liabilities at each reporting date. Future tax benefits, such as the carry-forward of unused tax losses, are also recognized to the extent that realization of such benefits is probable.
Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied to the period when any of the assets is realized or any of the liabilities is settled, based on tax rates
and tax laws that have been enacted or substantively enacted at the balance sheet date.
Amendment to a tax obligation is recorded when an assessment is received or, if appealed, when the result of the appeal is determined.
s. Segment
Reporting
The Company and Subsidiaries’ businesses are grouped into three major operating businesses: cement, ready mix concrete and aggregates quarry, and other businesses. Financial information
on business segments is presented in Note 18.
t. Stock Issuance Costs
All costs related to the issuance of equity securities are offset against additional paid-in capital.
u. Earnings per Share
Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the year, which is 3,681,231,699 shares in 2008 and 2007.
v. Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect
amounts reported therein. Due to inherent uncertainty in making estimates, actual results reported in future periods may be based on amounts that differ from those estimates.
PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Six months ended June 30, 2008 and 2007 Expressed in rupiah, unless otherwise stated
17
3. CASH AND CASH EQUIVALENTS
