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
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c. Principles of Consolidation and Accounting for Business Combination
Principles of Consolidation Effective January 1, 2011, the Group retrospectively adopted PSAK No. 4 Revised 2009,
“Consolidated and Separate Financial Statements”, except for the following items that were applied prospectively: i losses of a subsidiary that result in a deficit balance to
noncontrolling interests “NCI”; ii loss of control over a subsidiary; iii change in the ownership interest in a subsidiary that does not result in a loss of control; iv potential
voting rights in determining the existence of control; and v consolidation of a subsidiary that is subject to long-term restriction.
The consolidated financial statements include the accounts of the Company and Subsidiaries mentioned in Note 1c.
Inter-company transactions, balances and unrealized gains or loss on transactions between Group companies are eliminated.
Subsidiaries are fully consolidated from the date of acquisitions, being the date on which the Company obtained control, and continue to be consolidated until the date such control
ceases. Control is presumed to exist if the Company owns, directly or indirectly through another subsidiary, more than half of the voting power of an entity unless, in exceptional
circumstances, it can be clearly demonstrated that such ownership does not constitute control. Control also exists under certain circumstances when there is:
• power over more than half of the voting rights by virtue of an agreement with other
investors; •
power to govern the financial and operating policies of the entity under a statute or an agreement;
• power to appoint or remove the majority of the members of the board directors or equivalent governing body and control of the entity is by that board or body; or
• power to cast the majority of votes at meetings of the board of directors or equivalent
governing body and control of the entity is by the board or body. Losses of a non-wholly owned subsidiary are attributed to the NCI even if that results in a
deficit balance. In case of loss of control over a subsidiary, the Company andor its subsidiaries:
• derecognizes the assets including goodwill and liabilities of the subsidiary;
• derecognizes the carrying amount of any NCI;
• derecognizes the cumulative translation differences, recorded in equity, if any;
• recognizes the fair value of the consideration received;
• recognizes the fair value of any investment retained;
• recognizes any surplus or deficit in profit or loss; and
• reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss or retained earnings, as appropriate.
NCI represents the portion of the profit or loss and net assets of the subsidiaries attributable to equity interests that are not owned directly or indirectly by the Company, which are
presented in the consolidated statement of comprehensive income and under the equity section of the consolidated statement of financial position, respectively, separately from the
corresponding portion attributable to the equity holders of the Company.
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
- 24 - Transactions with non-controlling interests that do not result in loss of control are accounted
for as equity transactions. The difference between the fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is
recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
Business Combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at
acquisition date fair value and the amount of any NCI in the acquiree. For each business combination, the acquirer measures the NCI in the acquiree either at fair value or at the
proportionate share of the acquiree’s identifiable net assets. Acquisition related costs incurred are directly expensed and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the
contractual terms, economic circumstances and pertinent conditions as of the acquisition date.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the
acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent
consideration which is deemed to be an asset or liability will be recognized in accordance with PSAK No. 55 either in profit or loss or as other comprehensive income. If the contingent
consideration is classified as equity, it should not be measured until it is finally settled within equity.
At acquisition date, goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognized for NCI over the net identifiable
assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination
is, from the acquisition date, allocated to each of the Company andor its subsidiaries’ cash- generating units “CGU” that are expected to benefit from the combination, irrespective of
whether other assets or liabilities of the acquired are assigned to those CGUs. Where goodwill forms part of a CGU and part of the operation within that CGU is disposed
of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill
disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the CGU retained.
d. Transactions Among Entities under Common Control
Entities under common control are parties individual, company, or other form of entities which directly or indirectly through one or more intermediaries control or are controlled by
or are under the same control.
