PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
December 31, 2011 and 2010 and For the Years then Ended
- 43 - Deposits include syariah deposits and unrestricted investments consisting of:
• Savings Wadiah is entrusted funds in the form of savings where income fund owners get a bonus.
• Unrestricted investments in current accounts, savings and time deposits represent deposits of customers funds that provide benefits for the owner of funds from Islamic
unit revenue for the use of these funds in accordance with the ratio determined and approved previously.
Deposits from other banks are liabilities to other banks in the form of demand deposits and call money less thanor 90 days and time deposits with original maturities of each
agreement.
z. Liability for Future Policy Benefits
Liability for future policy benefits represents the present value of estimated future policy benefits to be paid to policyholders or their heirs less present value of estimated future
premiums to be received from the policyholders, recognized consistently with the recognition of premium income. Liability for future policy benefits is stated in the consolidated statement
of financial position in accordance with actuarial calculation. The increase decrease in liability for future policy benefits is recognized as an expense income in the current year.
aa. Stock Issuance Costs
Stock issuance costs are deducted from the additional paid-in capital portion of the related proceeds from issuance of shares and are not amortized.
ab. Recognition of Revenues and Expenses
1. Recognition of Interest Revenues, Interest Expenses, Sharia Revenue, and Revenue Sharing Distribution
Interest Revenue and Interest Expenses Interest income and interest expense for all financial instruments are recognized in the
consolidated statement of income on accrual basis using the effective interest rate method.
Transaction costs that occur and are directly attributable to the acquisition or issuance of financial instruments not measured at fair value through profit and loss are amortized
over the life of financial instruments using the effective interest rate method and recorded as part of interest income for financial assets directly attributable transaction
costs, and as part of interest expense related to transaction costs of financial liabilities. If a financial asset or group of similar financial assets in the category are held to
maturity, loans and receivables, and available for sale are impaired, the interest income earned after the impairment loss is recognized based on the interest rate used for
discounting future cash flows in calculating impairment losses.
Revenue and ExpenseProfit Sharing Sharia Revenue consists of income from murabahah sharia, income from ijarah assets lease,
and from the results of financing.
PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
December 31, 2011 and 2010 and For the Years then Ended
- 44 - Murabahah and revenue from “ijarah muntahiyah bittamlik” are recognized over the
contract period on an accrual basis. Revenues for the results of financing are recognized when received or within the period of entitlement based on profit sharing
portion ratio agreed.
2. Recognition of Underwriting Income and Expenses
Underwriting Income
Premiums on insurance and reinsurance contracts are recognized as revenue over the policy contract period in proportion to the insurance coverage provided. Premiums from
co-insurance are recognized as income based on the subsidiary’s proportionate share in the premium. Premium due to the reinsurance company is recognized as reinsurance
premium during the period of reinsurance contract in proportion to the insurance coverage received.
Unearned premiums for each type of coverage are calculated in aggregate using a certain percentage in accordance with Decree of the Minister of Finance of the Republic
of Indonesia No. 424KMK.062003, dated September 30, 2003.
The increase or decrease in unearned premiums represents the difference between the balances of unearned premiums in the current year and the prior year, and is charged
to or credited in the consolidated statement of comprehensive income of the current year.
The subsidiary reinsured part of its total accepted risk to other insurance and reinsurance companies. The amount of premium paid or part of premium for
prospective reinsurance transactions is recognized as reinsurance premiums within the reinsurance contract period, in proportion to the insurance coverage provided. Payment
or obligation for retrospective reinsurance transactions is recognized as reinsurance receivable in an amount equivalent to the recorded liability in connection with the
reinsurance contract.
Underwriting Expenses Claims and benefits consist of settled claims, claims in process, including claims
incurred but not yet reported, and claims settlement expenses. Claims are recognized as expense when the obligation to settle the claims are incurred. Parts of claims
recovered from reinsurers are recorded and recognized as deduction from claims expenses in the same period when claims expenses are recognized. Subrogation rights
are recognized as deduction from claims expenses when realized.
Claims in process estimated own retention claims are computed based on estimated loss from own retention claims that are in process at statement of financial position
date, including claims incurred but not yet reported. The changes in estimated own retention claims are recognized in the consolidated statements of income at the time of
change. The increase or decrease in estimated own retention claims represents the difference between the estimated own retention claims for the current year and the prior
year. Estimated claims liability for death insurance, health and personal accident insurance are provided based on actuary computations.
