NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2012 AND 2011
Expressed in millions of Rupiah, unless otherwise stated
Appendix 537 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
r. Fixed Assets and Leased Assets continued
ii. Leased assets continued Under an operating lease, the Bank recognise lease payments as an expense on a straight-line
basis over the lease term. If a rental agreement contains elements of land and buildings, the Bank assessed the
classification of each element as a finance lease or an operating lease separately.
s. Investments in Shares
Investments in shares represent long-term investments in non-publicly-listed companies and temporary investments in debtor companies arising from conversion of loans to equity.
Investments in shares representing ownership interests of 20.00 to 50.00 are accounted for using the equity method. Under this method, investments are stated at cost and adjusted for the
Bank’s proportionate share in the net equity of the investees and reduced by dividends earned starting the acquisition date net of by allowance for impairment losses.
Temporary investment is written-off from the consolidated statement of financial position if it is held for more than 5 years in accordance with Bank Indonesia Regulation No. 72PBI2005 dated
20 January 2005 on “Asset Quality Ratings for Commercial Banks”, as amended by Bank Indonesia Regulation No. 112PBI2009 dated 29 January 2009. Since 24 October 2012, Group follows Bank
Indonesia Regulation No. 1415PBI2012 dated 24 October 2012 Regarding “Asset Quality Rating for Commercial Banks”.
Investment in shares with ownership below 20 are classified as financial assets available for sale. Refer to Note 2c for the accounting policy of financial assets available for sale.
Goodwill is recognised, when there is a difference between the acquisition cost and the Bank’s portion of the fair value of identified assets and liabilities at the acquisition date. Goodwill is
presented as other assets. Starting 1 January 2011, with the effective implementation of SFAS No. 22 Revised 2010 “Business Combination”, Goodwill arised from acquisition prior to 1 January 2011
is not amortised but subject to regular impairment assessment. Prior to 1 January 2011, Goodwill is amortised as expense over the period using the straight-line method, unless there is other method
considered more appropriate in certain conditions. The Goodwill amortisation period is 5 five years, but a longer amortisation period may be applied with maximum 20 years period with appropriate
basis.
t. Allowance for Possible Losses on Non-Earning Assets
Non-earning assets of Bank Mandiri and the Subsidiaries’ assets consist of repossessed assets, abandoned properties, inter-office accounts and suspense accounts.
Starting 1 January 2011, the Bank provided an allowance for impairment of collateral confiscated and abandoned property to the value of the lower of carrying amount and fair value net of costs to
sell. As for the inter-office account and suspense account, the value of the lower of carrying value and the recovery value.
u. Acceptance Receivables and Payables
Acceptance receivables are classified as financial assets in loans and receivables. Refer to Note 2c for the accounting policy of loans and receivables.
Acceptance payables are classified as financial liabilities at amortised cost. Refer to Note 2c for the accounting policy for financial liabilities at amortised cost.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2012 AND 2011
Expressed in millions of Rupiah, unless otherwise stated
Appendix 538 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
v. Other Assets
Other assets include accrued income for interest, provision and commissions, receivables, repossessed assets, abandoned properties, inter-branch accounts and others.
Repossessed assets represent assets acquired by Bank Mandiri and Subsidiaries, both from auction and non auction based on voluntary transfer by the debtor or based on debtor’s approval to sell the
collateral where the debtor could not fulfill their obligations to Bank Mandiri and Subsidiaries. Repossessed assets represent loan collateral acquired in settlement of loans and is included in
“Other Assets”.
Abandoned properties represent Bank and Subsidiaries’ fixed assets in form of property which were not used for Bank and Subsidiaries’ business operational activity.
Repossessed assets and abandoned properties are presented at their net realisable values. Net realisable value is the fair value of the repossessed assets less estimated costs of liquidating the
repossessed assets. Any excess of the loan balance over the value of the repossessed assets, which is not recoverable from the borrower, is charged to the allowance for impairment losses.
Differences between the estimated realisable value and the proceeds from sale of the repossessed assets are recognised as current year’s gain or loss at the time of sale.
Expenses for maintaining repossessed assets and abandoned properties are recognised in the current year’s consolidated statement of income. The carrying amount of the repossessed assets is
impaired to recognise a permanent decrease in value of the repossessed asset. Any impairment occurred will be charged to the current year’s consolidated statement of income. Refer to Note 2t for
changes in accounting policy to determine impairment losses on repossessed assets and abandoned properties.
w. Obligation due Immediately
Obligations due immediately are recorded at the time of the obligations occurred from customer or other banks. Obligation due immediately are classified as financial liabilities at amortised cost.
x. Deposits from Customers
Deposits from customers are the funds placed by customers excluding banks with the Bank and Subsidiaries which operate in banking industry based on a fund deposit agreements. Included in this
account are demand deposits, saving deposits, time deposits and other similar deposits.
Demand deposits represent deposits of customers that may be used as instruments of payment, and which may be withdrawn at any time by cheque, automated teller machine card ATM or other
orders of payment or transfers. Saving deposits represent deposits of customers that may only be withdrawn over the counter and
via ATMs or funds transfers by SMS Banking, Phone Banking and Internet Banking when certain agreed conditions are met, but which may not be withdrawn by cheque or other equivalent
instruments.
