Impairment of Assets Intangible Assets Related Parties

k. Fixed Assets

As of January 1, 2009, the Company has been implemented PSAK No. 16 Fixed Assets Revised 2007 as determined by the Indonesian Institute of Accountants. The Company has decided to use cost method concerned to the fixed assets accounting policy. Depreciation is computed using the straight-line method based on their estimated useful lives of the assets except land as follows: Buildings and structures 25 years Machinery and equipment 15 years Vehicles 10 years Furniture and fixtures 10 years The cost of repair and maintenance is charged to income as incurred; significant renewals or betterments are capitalized. When assets are retired or otherwise disposed of, their carrying values and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in earnings. Fixed assets which are not in used, will be classified as asset held for sale. Construction in progress represents the accumulated costs of materials and other costs related to the construction of fixed asset. The accumulated costs will be reclassified to the appropriate fixed asset account when the construction is completed and the asset is ready for its intended use.

l. Impairment of Assets

At each balance sheet date, the Company and subsidiaries review whether there is any indication of asset impairment or not. Fixed assets and other assets, including intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of the assets exceeds its recoverable amount, which is the higher of an assets net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.

m. Intangible Assets

The expense incurred in relation to the extension of land-rights are capitalized and amortized over the lifetime of the land- rights which is 20 years. The expense incurred in relation to the acquisition of software are capitalized and amortized over 10 years. As of each balance sheet date, the Company and its Subsidiaries assess whether there is any indication of impairment. If any such indication exists, the recoverable amount is estimated.

n. Related Parties

In the ordinary course of business, the Company has transactions with entities which are regarded as having special relationship as defined under PSAK No. 7, “Related Party Disclosures”. All significant transactions and balances with related parties are disclosed in the notes to the consolidated financial statements. 02 02 02 02 PT. ERATEX DJAJA Tbk 2010 Annual Report 041 040 PT. ERATEX DJAJA Tbk 2010 Annual Report PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2010 and 2009 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2010 and 2009 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

o. Taxation