SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued v. Treasury stock SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 40 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued ab. Changes in accounting policies and disclosures continued Implementation of PSAK 24, Employee Benefits Revised 2013 continued Before After restatement Restatement restatement Consolidated statement of financial position as of January 1, 2014 continued Retained earnings Unappropriated 43,291 719 42,572 Net equity attributable to: Owners of the parent company 60,542 719 59,823 Non-controlling interests 16,882 16 16,898 Consolidated statement of financial position as of December 31, 2014 Prepaid pension benefit costs 771 399 1,170 Deferred tax assets - net 99 4 95 Deferred tax liabilities - net 2,743 89 2,654 Post-retirement health care benefit costs provisions 602 161 441 Pension and other post-employment benefits 3,092 778 3,870 Retained earnings Unappropriated 47,986 86 47,900 Net equity attributable to: Owners of the parent company 67,807 86 67,721 Non-controlling interests 18,318 47 18,271 Consolidated statement of profit or loss and other comprehensive income for the year ended December 31, 2014 Personnel expenses 9,616 171 9,787 Operating profit 29,377 171 29,206 Profit before income tax 28,784 171 28,613 Income tax expense benefit - deferred 278 1 277 Profit for the year 21,446 172 21,274 Actuarial gain PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 41 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued ab. Changes in accounting policies and disclosures continued The impact of the implementation of those revised standards, comparative balance in the consolidated financial statements presented as follows: Before After restatement Restatement restatement Consolidated statement of financial position as of January 1, 2014 Total current assets 33,075 597 33,672 Total non-current assets 94,876 7 94,883 Total assets 127,951 604 128,555 Total current liabilities 28,437 597 29,034 Total non-current liabilities 22,090 710 22,800 Total liabilities 50,527 1,307 51,834 Total equity 77,424 703 76,721 Total liabilities and equity 127,951 604 128,555 Consolidated statement of financial position as of December 31, 2014 Total current assets 33,762 532 34,294 Total non-current assets 107,133 395 107,528 Total assets 140,895 927 141,822 Total current liabilities 31,786 532 32,318 Total non-current liabilities 22,984 528 23,512 Total liabilities 54,770 1,060 55,830 Total equity 86,125 133 85,992 Total liabilities and equity 140,895 927 141,822 Other new and amended standards Group has also implemented several new standards and revisions in 2015. The adoption of these standards had no significant impact on the consolidated financial statements. ac. Critical Accounting Estimates and Judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below. PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 42

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

ac. Critical accounting estimates and judgements continued i. Retirement benefits The present value of the retirement benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost income for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of retirement benefit obligations. The Group determines the appropriate discount rate at the end of each reporting period. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the obligations. In determining the appropriate discount rate, the Group considers the interest rates of Government bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related retirement benefit obligations. If there is an improvement in the ratings of such Government bonds or a decrease in interest rates as a result of improving economic conditions, there could be a material impact on the discount rate used in determining the post-employment benefits obligations. Other key assumptions for retirement benefit obligations are based in part on current market conditions. Additional information is disclosed in Notes 33, 34 and 35. ii. Useful lives of property and equipment The Group estimate the useful lives of their property and equipment based on expected asset utilization, considering strategic business plans, expected future technological developments and market behavior. The estimates of useful lives of property and equipment are based on the Group PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 43

3. BUSINESS COMBINATIONS

Acquisition of Contact Centers Australia Pty. Ltd. PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 44

4. CASH AND CASH EQUIVALENTS

The breakdown of cash and cash equivalents is as follows: 2015 2014 Balance Balance Original Original currency Rupiah currency Rupiah Currency in millions equivalent in millions equivalent Cash on hand Rp - 10 - 24 Cash in banks Related parties PT Bank Mandiri Persero Tbk PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 45

4. CASH AND CASH EQUIVALENTS continued

2015 2014 Balance Balance Original Original currency Rupiah currency Rupiah Currency in millions equivalent in millions equivalent Time deposits continued Third parties PT Bank Mega Tbk