PT SUMMARECON AGUNG Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2017 and for the Six-Month Periods Then Ended Expressed in thousands of Indonesian Rupiah, unless otherwise stated
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED k. Investment properties continued
For a transfer from investment properties to owner-occupied property, the Company uses the cost method at the date of change in use. If an owner-occupied property becomes an investment property, the Company records the
investment property in accordance with the fixed assets policies up to the date of change in use.
l. Leases
The Group classifies a lease based on the extent to which risks and rewards incidential to the ownership of a leased asset are vested upon the lessor or the lessee, and on the substance of the transaction rather than the form of the
contract, at inception date. Finance lease
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an asset.
Operating lease A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to
ownership of the leased asset. Accordingly, the lease payments received by the Group as lessors are recognized as income using the straight-line method over the lease term.
m. Capitalization of borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of the related asset. Other borrowing costs are recognized as expenses in the period in
which they are incurred. Borrowing costs may include interest, finance charges in respect of finance leases recognized in accordance with PSAK No. 30 Revised 2011 and foreign exchange differences arising from foreign currency
borrowings to the extent that they are regarded as adjustment to interest costs. Capitalization of borrowing costs commences when the activities to prepare the qualifying asset for its intended use
have started and the expenditures for the qualifying asset and the borrowing costs have been incurred. Capitalization of borrowing costs ceases when all the activities necessary to prepare the qualifying asset for its
intended use are substantially completed. The capitalization of borrowing costs is suspended if there are prolonged periods when development activity is
interrupted. Interest is also capitalized on the purchase cost of a site property acquired specifically for development, but only where activities necessary to prepare the asset for development are in progress.
n. Impairment of non-financial asset value
