PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2016 and for the Year Then Ended
Figures in tables are expressed in billions of Rupiah, unless otherwise stated
23
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued n. Deferred charges - land rights
Costs incurred to process the initial legal land rights are recognized as part of the property and equipment and are not amortized. Costs incurred to process the extension or renewal of legal land
rights are deferred and amortized using the straight-line method over the shorter of the legal term of the land rights or the economic life of the land.
o. Trade payables Trade payables are obligations to pay for goods or services that have been acquired from
suppliers in the ordinary course of business. Trade payables are classified as current liabilities if the payment is due within one year or less. If not, they are presented as non-current liabilities.
Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method.
p. Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost; any difference between the proceeds net of transaction
costs and the redemption value is recognized in the consolidated statements of profit or loss and other comprehensive income over the period of the borrowings using the effective interest method.
Fees paid on obtaining loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facilities will be drawn down. In this case, the fee is deferred
until the drawdown occurs. To the extent there is no evidence that it is probable that some or all of the facilities will be drawn down, the fee is capitalized as a pre-payment for liquidity services and
amortized over the period of the facilities to which it relates.
q. Foreign currency translations The functional currency and the recording currency of the Group are both the Indonesian rupiah,
except for the functional currency of Telekomunikasi Indonesia International Pte. Ltd., Hong Kong, Telekomunikasi Indonesia International Pte. Ltd., Singapore, Telekomunikasi Indonesia
International Inc., USA and Telekomunikasi Indonesia International S.A., Timor Leste whose accounting records are maintained in U.S. dollars and Telekomunikasi Indonesia International, Pty.
Ltd., Australia whose accounting records are maintained in Australian dollars. Transactions in foreign currencies are translated into Indonesian rupiah at the rates of exchange prevailing at
transaction date. At the consolidated statements of financial position dates, monetary assets and liabilities denominated in foreign currencies are translated into Indonesian rupiah based on the buy
and sell rates quoted by Reuters prevailing at the consolidated statements of financial position dates, as follows in full amount:
2016 2015
Buy Sell
Buy Sell
U.S. dollar “US” 1
13,470 13,475
13,780 13,790
Australian dollar “AU” 1
9,721 9,726
10,076 10,092
Euro 1 14,170
14,181 15,049
15,064 Yen 1
115.01 115.10
114.47 114.56
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2016 and for the Year Then Ended
Figures in tables are expressed in billions of Rupiah, unless otherwise stated
24
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued q. Foreign currency translations continued
The resulting foreign exchange gains or losses, realized and unrealized, are credited or charged to the consolidated statements of profit or loss and other comprehensive income of the current year,
except for foreign exchange differences incurred on borrowings during the construction of qualifying assets which are capitalized to the extent that the borrowings can be attributed to the construction
of those qualifying assets Note 2l.
r. Revenue and expense recognition
i. Cellular and fixed wireless telephone revenues
Revenues from postpaid service, which consist of usage and monthly charges, are recognized as follows:
Airtime and charges for value added services are recognized based on usage by subscribers.
Monthly subscription charges are recognized as revenues when incurred by subscribers. Revenues from prepaid service, which consist of the sale of starter packs also known as SIM
cards and start-up load vouchers and pulse reload vouchers, are recognized initially as unearned income and recognized as revenue based on total of successful calls made and the
value added services used by the subscribers or the expiration of the unused stored value of the voucher.
ii. Fixed line telephone revenues Revenues from usage charges are recognized as customers incur the charges. Monthly
subscription charges are recognized as revenues when incurred by subscribers. Revenues from fixed line installations are deferred and recognized as revenue on the straight-
line basis over the expected term of the customer relationships. Based on reviews of historical information and customer trends, the Company determined the term of the customer
relationships is 18 years.
iii. Interconnection revenues Revenues from network interconnection with other domestic and international
telecommunications carriers are recognized monthly on the basis of the actual recorded traffic for the month. Interconnection revenues consist of revenues derived from other operators’
subscriber calls to t he Group’s subscribers incoming and calls between subscribers of other
operators through t he Group’s network transit.
iv. Data, internet, and information technology service revenues Revenues from data communication and internet are recognized based on service activity and
performance which are measured by the duration of internet usage or based on the fixed amount of charges depending on the arrangements with customers.
Revenues from sales, installation and implementation of computer software and hardware, computer data network installation service and installation are recognized when the goods are
delivered to customers or the installation takes place. Revenue from computer software development service is recognized using the percentage-of-
completion method. v. Network revenues
Revenues from network consist of revenues from leased lines and satellite transponder leases which are recognized over the period in which the services are rendered.
