Deposits and Deposits from Other Banks

PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2012 and 2011 and January 1, 2011December 31, 2010 and For the Years then Ended December 31, 2012 and 2011 Figures are Presented in Millions of Rupiah, unless Otherwise Stated - 47 - 2. Recognition of Insurance Underwriting Income and Expenses Underwriting Income Premiums received from short-term insurance contracts are recognized as income within the contract period based on the insurance coverage provided. Premiums received from long-term insurance contracts are recognized as income when these are due. Premiums received prior to the issuance of insurance policies is recorded as Policyholders’ deposit. Gross reinsurance premiums are recognized as an expense when payable or on the date on which the policy is effective. Claims Expenses Claims consist of settled claims, claims in process, claims incurred but not reported and claims settlement expense. Claims are recognized as expense at the time liabilities for claims are recognized. A portion of the claims received from reinsurance are recognized and recorded as deduction from claims expenses in the same period when the claims expenses are recognized. Subrogation rights are recognized as deduction from claims expenses at the time of realization. Claims in process estimated claims are computed based on estimated loss which at consolidated statements of financial position date are still in process, including claims incurred but not reported. Commission Expenses Commission due to insurance brokers, agents and other insurance companies in connection with the insurance coverage are recorded as commission expense, whereas commissions obtained from reinsurance transactions are recorded as commission income and recognized in the consolidated statements of comprehensive income when earned. 3. Recognition of Shares Administration, Underwriting and Stock Brokerage Fees and Investment Management Income Shares administration fees, stock brokerage fees and underwriting fees are recognized as income when the services for trading of securities in the stock exchange and underwriting activities are performed. Investment management income is recognized based on agreed conditions as stated in the “Collective Investment Contract”. 4. Recognition of Other Revenue and Expenses Fees and Commissions Related to Financial Instruments Commission income and expense fees associated with the acquisition of financial instruments categorized as held to maturity, loans and receivables, and available for sale, or related to a period of time and that the amount is significant, is recorded as part of the fair value of financial assets or financial liability and amortized over the period using the effective interest rate. Meanwhile, fees and commissions that are not significant in amounts are recognized as revenue when the revenue is received or expense at the time of payment. PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2012 and 2011 and January 1, 2011December 31, 2010 and For the Years then Ended December 31, 2012 and 2011 Figures are Presented in Millions of Rupiah, unless Otherwise Stated - 48 - Other Fees and Commission Fees and commissions that are not related to the issuance or acquisition of financial instruments and have maturity terms in which amounts are significant, are treated as deferred income or expenses and amortized using the straight-line method over the term of the relevant transaction. Other fees and commission revenues not related to credit, such as bancaassurance services, and revenues associated with import and export bank guarantee, are recognized as revenue associated with the services provided. Other Income and Expense Income from assets for lease operating lease is recognized using the straight-line method over the lease period Note 2k. Administration income incurred in relation with lease, consumer finance, and factoring transaction are recognized when earned. Other income expense are recognized when earned incurred and in accordance with their beneficial period accrual basis. ac. Employee Benefits Short-term employee benefits liability Short-term employee benefits are in form of wages, salaries, and social security Jamsostek contribution and bonuses. Short-term employee benefits are recognized at its undiscounted amount as a liability after deducting any amount already paid in the consolidated statement of financial position and as an expense in the consolidated statement of comprehensive income. Long-term employee benefits liability Long-term employment benefits liability repesents post-employment benefits, unfunded defined-benefit plans which amounts are determined based on years of service and salaries of the employees at the time of pension. The actuarial valuation method used to determine the present value of defined-benefit liability, related current service costs, and past service costs is the Projected Unit Credit. Current service costs, interest costs, vested past service costs, and effects of curtailments and settlements if any are charged directly to current operations. Past service costs which are not yet vested and actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions in excess of the corridor or greater 10 of the present value of the defined benefit obligation are charged or credited to profit or loss over the employees expected average remaining working lives, until the benefits become vested.