Employee benefits SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 UNAUDITED AND FOR SIX MONTHS PERIOD ENDED WITH COMPARATIVE FIGURES AS OF DECEMBER 31, 2012 AUDITED AND FOR SIX MONTHS PERIOD ENDED JUNE 30, 2012 UNAUDITED Figures in tables are presented in billions of Rupiah, unless otherwise stated 31

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

u. Financial instruments

The Company and subsidiaries classify financial instruments into financial assets and financial liabilities. Financial assets and liabilities are recognized initially at fair value including transaction costs. These are subsequently measured either at fair value or amortized cost using the effective interest method in accordance with their classification. i. Financial assets The Company and subsidiaries classify their financial assets as i financial assets at fair value through profit or loss, ii loans and receivables, iii held-to-maturity financial assets or iv available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of financial assets at initial recognition. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace regular way trades are recognized on the trade date, i.e., the date that the Company and subsidiaries commits to purchase or sell the assets. The Company s financial assets include cash and cash equivalents, other current financial assets, trade receivables and other receivables, long-term investments, advances and other non-current financial assets. a. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets classified as held for trading. A financial asset is classified as held for trading if it is acquired principally for the purpose of selling or repurchasing it in the near term and for which there is evidence of a recent actual pattern of short-term profit taking. Gains or losses arising from changes in fair value of the trading securities are presented as other expensesincome in consolidated statements of comprehensive income in the period in which they arise. No financial assets were classified as financial assets at fair value through profit or loss as of June 30, 2013 and December 31, 2012. b. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables consist of, among other things, cash and cash equivalents, trade receivables, other receivables, other current financial assets and other non-current financial assets. These are initially recognized at fair value including transaction costs and subsequently measured at amortized cost, using the effective interest method. PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 UNAUDITED AND FOR SIX MONTHS PERIOD ENDED WITH COMPARATIVE FIGURES AS OF DECEMBER 31, 2012 AUDITED AND FOR SIX MONTHS PERIOD ENDED JUNE 30, 2012 UNAUDITED Figures in tables are presented in billions of Rupiah, unless otherwise stated 32

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued