150 Adaro Energy Annual Report 2009
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PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 512
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2009 AND 2008
Expressed in million Rupiah, unless otherwise stated
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
p. Provision for employee benefits continued
ii Termination benefits
Termination benefits are payable when employments is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits.
The Group recognises the termination benefits when it is demonstrably committed to either: terminating the employment of current employees
according to a detailed formal plan without realistic possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the
reporting period are discounted to their present value.
q. Taxation
The tax expense for the period comprises current and deferred income tax. The tax expense is recognised in the consolidated statement of income, except to the extent that it relates to items recognised directly in equity. In this case the tax expense is
also recognised directly in equity. Deferred income tax is recognised using the balance sheet liability method on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liabiltiy in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss. The tax rate used to calculate the deferred income tax by the Company and its subsidiaries, except for Adaro, is the current or substantially
enacted tax rate. The tax rate used by Adaro is, according to CCA, 35 for the first ten years from the date of the agreement and 45 for the subsequent years.
Deferred tax assets relating to future tax benefits and the carry forward of unused tax losses are recognised to the extent that it is probable that future taxable profit will be available against which the future tax benefits and unused tax losses can be
utilised. For income which is subject to final tax, income tax expense is recognised proportionally with revenue recognised in the
current period. The difference between the amount of final tax payable and the amount charged as current tax for calculation of profit or loss is recognised as prepaid tax or accrued tax.
Amendments to taxation obligations are recorded when an assessment is received or, if objected to or appealed against, when the results of the objection or appeal are determined.
r. Revenue and expense recognition
Revenue is recognised from the sale of the Group’s products and services, net of returns, trade allowances, duties and Value Added Tax “VAT”.
Revenue from sales of goods is recognised when all the following conditions are met: -
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; -
the Group retains neither continuing managerial involvement nor effective control over the goods sold; -
the amount of revenue can be measured reliably; -
it is probable that the economic benefits associated with the transaction will flow to the Group; and -
the costs incurred or to be incurred with respect to the sales transaction can be measured reliably. When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the
transaction is recognised by reference to the stage of completion of the transaction at the balance sheet date. The outcome of a transaction can be estimated reliably when all the following conditions are met:
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the transaction will flow to the Group;
- the stage of completion of the transaction at the balance sheet date can be measured reliably; and
- the costs incurred for the transaction, and the costs to complete the transaction, can be measured reliably.
When the outcome of a transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.
Advances from customers are recognised when the proceeds are received, but the coal has not been delivered or the service has not been rendered yet. Advances from customers are subsequently reduced when the Group recogn ises the revenue.
Advances from customers are classified as current liability, except for the amount which is not expected to be earned within 12 months from the balance sheet date.
Expenses are recognised as incurred on an accrual basis.
