Employees, Directors and Commissioners

PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2011 and 2010 and For the Years then Ended - 22 - In accordance with the transitional provisions of PSAK No. 22 Revised 2010, starting January 1, 2011, the Group: • ceased the goodwill amortization; • eliminated the carrying amount of the related accumulated amortization of goodwill; and • performed an impairment test of goodwill in accordance with PSAK No. 48 Revised 2009, “Impairment of Assets”. Further, the balance of negative goodwill which is recognized before January 1, 2011 amounting to Rp 129,806 million was adjusted to retained earnings as of the beginning of the fiscal year, January 1, 2011 Note 34. 7 PSAK No. 25 Revised 2009, Accounting Policies, Changes in Accounting Estimates and Errors. Estimated losses on commitment and contingencies Starting from January 1, 2011, BS determines estimated losses on commitments and contingencies of bank guarantees, letters of credit and unused loan facilities based on the difference between the amortised amount carrying amount and the present value of any expected payment when a payment under the guarantee has become probable. Prior to January 1, 2011, BS assesses the estimated losses on commitments and contingencies allowance based on Bank Indonesia Regulation No. 72PBI2005 dated January 20, 2005 and in accordance ith Letter from Bank Indonesia No. 12516DPNPIDPnP dated September 21, 2010. Determination of estimated losses on commitments and contingencies are classified into five 5 categories with the minimum percentage of allowance for possible losses as follows: Classification Pass Minimum 1 Special mention Minimum 5 Substandard Minimum 15 Doubtful Minimum 50 Loss 100 Percentage of Losses Allowance for Possible The above percentages are applied to commitments and contingencies unused committed loan facilities, letter of credits and bank guarantee, less collateral value, except for commitments and contingencies categorised as pass, where the rates are applied directly to the outstanding balance of commitment and contingencies. Allowance for possible losses on non-productive Starting from January 1, 2011, BS determines allowance for possible losses on non productive asstes consisting of foreclosed properties, fixed asstes are not used, the administrative account and supense accounts at the lower of the carrying amount and fair value less costs to sell. PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2011 and 2010 and For the Years then Ended - 23 - Prior January 1, 2011, allowance for possible losses on non-productive assets was determined as follow: Period Current Up to 1 year Substandard More than 1 year up to 3 years Doubtful More than 3 years up to 5 years Loss More than 5 years The above changes on the determination of allowance for impairment losses represent changes in accounting policy which should generally be applied retrospectively requiring restatements of prior years’ results. However, as the impact of the changes in respect of prior years’ results is not material, no restatements were made and the impact of the changes was charged to the current year’s statement of comprehensive income. 8 PSAK No. 48 Revised 2009, “Impairment of Assets”, including goodwill and assets acquired from business combinations before January 1, 2011, prescribes the procedures to be employed by an entity to ensure that its assets are carried at no more than their recoverable amount. An asset is carried at more than its recoverable amount if its carrying amount exceeds the amount to be recovered through use or sale of the asset. If this is the case, the asset is described as impaired and this revised PSAK requires the entity to recognize an impairment loss. This revised PSAK also specifies when an entity should reverse an impairment loss and prescribes disclosures. As described herein, the adoption of PSAK No. 48 Revised 2009 has a significant impact on the financial reporting including for the related disclosures, mainly on the impairment test of goodwill which is required at least once a year and more frequently when indications for impairment exist. The following are the new and revised accounting standards and interpretations which should be adopted effective January 1, 2011 but which are or relevant but do not have material impact to the Group’ consolidated financial statements: PSAK 1. PSAK No. 2 Revised 2009, Statements of Cash Flows 2. PSAK No. 3 Revised 2010, Interim Financial Reporting 3. PSAK No. 8 Revised 2010, Events After the Reporting Period 4. PSAK No. 19 Revised 2010, Intangible Assets 5. PSAK No. 23 Revised 2010, Revenues 6. PSAK No. 57 Revised 2009, Provisions, Contingent Liabilities and Contingent Assets ISAK 1. ISAK 17 Revised 2009, Interim Financial Reporting and Impairment The following are the new and revised statements and interpretations which are effective January 1, 2011 but are irrelevant to the Group’s financial statements: PSAK 1. PSAK No. 12 Revised 2009, Investments in Joint Ventures 2. PSAK No. 58 Revised 2009, Non-Current Assets Held for Sale and Discontinued Operations