PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
For the Years Ended December 31, 2014 and 2013 Figures are Presented in Millions of Rupiah,unless Otherwise Stated
Management believes that the following represent a summary of the significant estimates, judgments, and assumptions made that affected certain reported amounts and disclosures in the
consolidated financial statements: Judgments
The following judgments are made by management in the process of applying the Group’s accounting policies that have the most significant effects on the amounts recognized in the
consolidated financial statements:
a. Functional Currency
In the process of applying the Group’s accounting policies, management has made judgment on the determination of functional currency of the foreign subsidiaries.
The functional currency of the Company and its subsidiaries is the currency of the primary economic environment in which each of them operates. It is the currency, among others,
that mainly influences sales prices for goods and services, and of the country whose competitive forces and regulations mainly determine the sales prices of its goods and
services, and the currency in which funds from financing activities are generated.
b. Classification of Financial Assets and Financial Liabilities
The Group determines the classifications of certain assets and liabilities as financial assets and liabilities by judging if they meet the definition set forth in PSAK No. 55. Accordingly, the
financial assets and liabilities are accounted for in accordance with the Group’s accounting policies disclosed in Note 2.
c. Financial Assets Not Quoted in Active Market
The Group classifies financial assets by evaluating, among others, whether the asset is quoted or not in an active market. Included in the evaluation on whether a financial asset is
quoted in an active market is the determination on whether quoted prices are readily and regularly available, and whether those prices represent actual and regularly occurring
market transactions on an arm’s length basis.
d. Allowance for Impairment of Financial Instruments
Allowance for impairment losses is maintained at a level considered adequate to provide for potentially uncollectible receivables. The Group assesses specifically at each consolidated
statement of financial position date whether there is an objective evidence that a financial asset is impaired uncollectible.
The level of allowance is based on past collection experience and other factors that may affect collectability such as the probability of insolvency or significant financial difficulties of
the debtors or significant delay in payments. If there is an objective evidence of impairment, timing and collectible amounts are estimated
based on historical loss data. Allowance for impairment is provided on accounts specifically identified as impaired. Written off loans and receivables are based on management’s
decisions that the financial assets are uncollectible or cannot be realized in whatsoever actions have been taken. Evaluation of receivables to determine the total allowance to be
provided is performed periodically during the year. Therefore, the timing and amount of allowance for impairment recorded at each period might differ based on the judgments and
estimates that have been used.
- 45 -
PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
For the Years Ended December 31, 2014 and 2013 Figures are Presented in Millions of Rupiah,unless Otherwise Stated
The carrying value of the Group’s financial assets classified as held to maturity and loans and receivables as of December 31, 2014 and 2013 are as follows:
2014 2013
Held to Maturity Short-term investments - securities - bonds
69,726 -
Loans and Receivables Cash and cash in banks
2,637,727 2,599,638
Securities purchased under agreements to resell -
139,211 Short-term investments - placements with other banks
308,569 593,813
Short-term investments - time deposits 3,767,547
1,950,998 Short-term investments - securities - export bill receivables
170,213 207,001
Consumer finance receivables - net 597,058
895,987 Factoring receivables - net
1,398,689 1,144,066
Receivables from brokers 263,426
378,544 Other receivables - net
2,105,313 623,751
Loans - net 12,519,290
9,924,090 Acceptance receivables
67,836 238,324
Other assets 33,264
25,940 Total
23,868,932 18,721,363
e. Impairment of AFS Equity Investments
The Group follows the guidance of PSAK No. 55 Revised 2011 to determine when an AFS equity investment is impaired. This determination requires significant judgment. In making
this judgment, the Group evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost; and the financial health of and short-term
business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.
If all of the decline in fair value below cost were considered significant or prolonged, the Group would suffer an additional loss in consolidated financial statements, being the
transfer of the accumulated fair value adjustments recognized in equity on the impaired AFS financial assets to the profit or loss.
f. Lease Commitmens
Group as Lessee The Group has entered into various lease agreements for commercial spaces. The Group
has determined that it is an operating lease since the Group does not bear substantially all the significant risks and rewards of ownership of the related assets.
Group as Lessor The Group has entered into various commercial lease agreements. The Group has
determined that it is an operating lease since the Group bears substantially all the significant risks and rewards of ownership of the related assets.
- 46 -
