Other Assets Mandiri - Investor Relations - Audited Financials 2009 12English

PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2009, 2008 AND 2007 Expressed in millions of Rupiah, unless otherwise stated Appendix 526 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued ab. Interest Income and Expense continued Interest receivable on non-performing assets of Bank Mandiri and its Subsidiaries is recorded as contingent receivables in the commitment and contingency statement in the notes to the consolidated financial statements. Included in interest income and expense are sharia income and expense. The Bank’s income as a fund manager mudharib consist of income from sale and purchase on murabahah transaction, income from istishna, rent income ijarah and income from profit sharing from mudharabah and musyarakah financing as well as other main operating income. Income from murabahah, which payment is made on installment or deferred, is recognised proportionally over the contract period, in accordance with generally accepted banking practice Surat Bank Indonesia No.101260DPbS dated 15 October 2008 and Surat Bank Indonesia No.9634DPbS dated 20 April 2007. Considering the risk on murabahah receivables, the Subsidiary adopts the following policy in recognising income from murabahah financing: 1. Murabahah with a deferred payment term of one year or less, without considering the cash collection on receivables nor management fee collection risks, the income is recognised using effective interest method annuity over the contract period. 2. Murabahah with a deffered payment term above than one year, where the risk of cash collection receivables andor management fee are relatively low risk, the income is recognised using effective interest method annuity. Subsidiary determine level of the risk based on internal requirement. Istishna income is recognised using percentage of completion method or at the end of contract. Ijarah income is recognised proportionally over the contract period. Musyarakah income for active partner is recognised based on an agreed portion in accordance with the financing contract. Mudharabah income is recognised in a period where the right of revenue sharing is due based on agreed portion. It is not allowable to recognise the income based on projection. Subsidiaries’ consumer financing income is presented net of with consumer financing income for other banks in relation with channeling transactions, joint financing cooperations, factoring, and the appointment as manager of accounts receivable. ac. Fees and Commissions Income Fees and commissions that are directly related to lending activities andor involving specific time periods are deferred and amortised using the straight-line method over those periods. The unamortised fees and commissions balances relating to loans which were settled prior to maturity are recognised upon settlement of the loan. Other fees and commissions that are not directly related to lending activities or involving specific time periods are recognised as income at the transaction date.