PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2011 AND 2010
Expressed in millions of Rupiah, unless otherwise stated
Appendix 540 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
s. Investments in Shares
Investments in shares represent long-term investments in non-publicly-listed companies and temporary investments in debtor companies arising from conversion of loans to equity.
Investments in shares representing ownership interests of 20.00 to 50.00 are accounted for using the equity method. Under this method, investments are stated at cost and adjusted for the
Bank’s proportionate share in the net equity of the investees and reduced by dividends earned since the acquisition date net of by allowance for impairment losses.
Prior to 1 January 2011, allowance for impairment losses on temporary investments from debt to equity swaps are determined using Bank Indonesia criteria set out in Bank Indonesia Regulation No.
72PBI2005 dated 20 January 2005 on “Asset Quality Ratings for Commercial Banks”. This regulation classifies temporary investments from debt to equity swaps into the following
classifications:
Holding Period Current
Up to 1 year Substandard
More than 1 year up to 4 years Doubtful
More than 4 years up to 5 years Loss
More than 5 years or the temporary investment has not been liquidated despite of the investee’s has accumulative profits
Temporary investment is written-off from the consolidated statement of financial position balance sheet if it is held for more than 5 years in accordance with Bank Indonesia Regulation No.
72PBI2005 dated 20 January 2005 on “Asset Quality Ratings for Commercial Banks”.
Investment in shares with ownership below 20 are classified as financial assets available for sale. Refer to Note 2c for the accounting policy of financial assets available for sale.
Goodwill is recognised, when there is a difference between the acquisition cost and the Bank’s portion of the fair value of identified assets and liabilities at the acquisition date. Goodwill is
presented as other assets. Starting 1 January 2011, with the effective implementation of SFAS No. 22 Revised 2010 “Business Combination”, Goodwill is not amortised but subject to regular
impairment assessment. Goodwill balance as at 31 December 2010 is no longer amortised, but subject to regular impairment assessment. Prior to 1 January 2011, Goodwill is amortised as
expense over the period using the straight-line method, unless there is other method considered more appropriate in certain conditions. The Goodwill amortisation period is 5 five years, but a
longer amortisation period may be applied with maximum 20 years period with appropriate basis.
t. Allowance for Possible Losses on Non-Earning Assets
Non-earning assets of Bank Mandiri and the Subsidiaries’ assets consist of repossessed assets, abandoned properties, inter-office accounts and suspense accounts.
Refer to Note 2b.b.iv for changes in accounting policy on allowance for possible losses on Non- Earning Assets.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2011 AND 2010
Expressed in millions of Rupiah, unless otherwise stated
Appendix 541 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
u. Acceptance Receivables and Payables
Acceptance receivables are classified as financial assets in loans and receivables. Refer to Note 2c for the accounting policy of loans and receivables.
Acceptance payables are classified as financial liabilities at amortised cost. Refer to Note 2c for the accounting policy for financial liabilities at amortised cost.
v. Other Assets
Other assets include accrued income for interest, provision and commissions, receivables, prepaid taxes, prepaid expenses, repossessed assets, abandoned properties, inter-branch accounts and
others.
Repossessed assets represent assets acquired by Bank Mandiri and Subsidiaries, both from auction and non auction based on voluntary transfer by the debtor or based on debtor’s approval to sell the
collateral where the debtor could not fulfill their obligations to Bank Mandiri and Subsidiaries. Repossessed assets represent loan collateral acquired in settlement of loans and is included in
“Other Assets”.
Abandoned properties represent Bank and Subsidiaries’ fixed assets in form of property which were not used for Bank and Subsidiaries’ business operational activity.
Repossessed assets and abandoned properties are presented at their net realisable values. Net realisable value is the fair value of the repossessed assets less estimated costs of liquidating the
repossessed assets. Any excess of the loan balance over the value of the repossessed assets, which is not recoverable from the borrower, is charged to the allowance for impairment losses.
Differences between the estimated realisable value and the proceeds from sale of the repossessed assets are recognised as current year’s gain or loss at the time of sale.
Expenses for maintaining repossessed assets and abandoned properties are recognised in the current year’s consolidated statement of income. The carrying amount of the repossessed assets is
impaired to recognise a permanent decrease in value of the repossessed asset. Any impairment occurred will be charged to the current year’s consolidated statement of income. Refer to Note
2b.b.iv for changes in accounting policy to determine impairment losses on repossessed assets and abandoned properties.
w. Obligation due Immediately
