Foreign currency translation Equity

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued DECEMBER 31, 2011 AND 2010, AND YEARS ENDED DECEMBER 31, 2011 AND 2010 Figures in tables are presented in billions of Rupiah, unless otherwise stated 29

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

continued

t. Income tax

continued The Company and its subsidiaries recognize deferred tax assets and liabilities for temporary differences between the financial and tax bases of assets and liabilities at each reporting date. The Company and its subsidiaries also recognize deferred tax assets resulting from the recognition of future tax benefits, such as the benefit of tax losses carried forward, to the extent their future realization is probable. Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates and tax laws at each reporting date which are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets and liabilities are offset in the consolidated statement of financial position, except if these are for different legal entities, in the same manner the current tax assets and liabilities are presented. Amendment to taxation obligations are recorded when an assessment is received or if appealed against, when the results of the appeal are determined.

u. Financial instruments

In 2006, the DSAK issued PSAK 50 Revised 2006 Financial Instruments: Presentation and Disclosures and PSAK 55 Revised 2006 Financial Instruments: Recognition and Measurement. These standards amend both PSAK 50 Accounting for Investments in Certain Securities and PSAK 55 Accounting for Derivative Instruments and Hedging Activities. Both standards are applicable for financial statements covering periods beginning on or after January 1, 2010. The adoption of the standards did not have a material impact on the result of the Company and its subsidiaries. In accordance with the transitional provision of PSAK 55 Revised 2006, the impact of recalculating the provision for impairment loss of Rp.91 billion has been adjusted to retained earnings at January 1, 2010. In implementing PSAK 50 Revised 2006 and PSAK 55 Revised 2006, the Company and its subsidiaries classify financial instruments into financial assets and financial liabilities. The Company and its 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 its subsidiaries classify their financial assets as i financial assets at fair value through profit and 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 financials assets were acquired. Management determines the classification of its financial assets at initial recognition. The Company’s financial assets include cash and cash equivalents, available-for sale financial assets, trade receivables, other receivables, other current financial assets and other non-current financial assets.