PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
For the Years Ended December 31, 2014 and 2013 Figures are Presented in Millions of Rupiah,unless Otherwise Stated
af. Segment Information
Segment information is prepared using the accounting policies adopted for preparing and presenting the consolidated financial statements.
Operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate
resources to the segments and to assess the Group’s performance.
An operating segment is a component of an entity: 1. That engages in business activities which it may earn revenue and incur expenses
including revenue and expenses relating to the transaction with other components of the same entity;
2. Whose operating results are reviewed regularly by the entity’s chief operating decision maker to make decision about resources to be allocated to the segments and assess
its performance; and 3. For which discrete financial information is available.
Information reported to the chief operating decision maker for the purpose of resources allocation and assessment of its performance is more specifically focused on the category of
each product, which is similar to the business segment information reported in the prior period.
ag. Provisions
Provisions are recognized when the Group has present obligation legal or constructive as a result of a past event, it is probable that the Group will be required to settle the obligation,
and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to
settle the obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated
to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured
reliably.
3. Management Use of Estimates, Judgments and Assumptions
In the application of the Group’s accounting policies, which are described in Note 2 to the consolidated financial statements, management is required to make estimates, judgments, and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and assumptions are based on historical experience and
other factors that are considered to be relevant.
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PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
For the Years Ended December 31, 2014 and 2013 Figures are Presented in Millions of Rupiah,unless Otherwise Stated
Management believes that the following represent a summary of the significant estimates, judgments, and assumptions made that affected certain reported amounts and disclosures in the
consolidated financial statements: Judgments
The following judgments are made by management in the process of applying the Group’s accounting policies that have the most significant effects on the amounts recognized in the
consolidated financial statements:
a. Functional Currency
In the process of applying the Group’s accounting policies, management has made judgment on the determination of functional currency of the foreign subsidiaries.
The functional currency of the Company and its subsidiaries is the currency of the primary economic environment in which each of them operates. It is the currency, among others,
that mainly influences sales prices for goods and services, and of the country whose competitive forces and regulations mainly determine the sales prices of its goods and
services, and the currency in which funds from financing activities are generated.
b. Classification of Financial Assets and Financial Liabilities
The Group determines the classifications of certain assets and liabilities as financial assets and liabilities by judging if they meet the definition set forth in PSAK No. 55. Accordingly, the
financial assets and liabilities are accounted for in accordance with the Group’s accounting policies disclosed in Note 2.
c. Financial Assets Not Quoted in Active Market
The Group classifies financial assets by evaluating, among others, whether the asset is quoted or not in an active market. Included in the evaluation on whether a financial asset is
quoted in an active market is the determination on whether quoted prices are readily and regularly available, and whether those prices represent actual and regularly occurring
market transactions on an arm’s length basis.
d. Allowance for Impairment of Financial Instruments
Allowance for impairment losses is maintained at a level considered adequate to provide for potentially uncollectible receivables. The Group assesses specifically at each consolidated
statement of financial position date whether there is an objective evidence that a financial asset is impaired uncollectible.
The level of allowance is based on past collection experience and other factors that may affect collectability such as the probability of insolvency or significant financial difficulties of
the debtors or significant delay in payments. If there is an objective evidence of impairment, timing and collectible amounts are estimated
based on historical loss data. Allowance for impairment is provided on accounts specifically identified as impaired. Written off loans and receivables are based on management’s
decisions that the financial assets are uncollectible or cannot be realized in whatsoever actions have been taken. Evaluation of receivables to determine the total allowance to be
provided is performed periodically during the year. Therefore, the timing and amount of allowance for impairment recorded at each period might differ based on the judgments and
estimates that have been used.
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