PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2011 AND 2010
Expressed in millions of Rupiah, unless otherwise stated
Appendix 543 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
z. Liability for Future Policy Benefits and Liability to Unit-Linked Holders
Subsidiary’s liability for future policy benefits is stated in the consolidated statement of financial position balance sheet as other liabilities in accordance with the actuarial calculation. Increases or
decreases in liability for future policy benefit are recognised as an expense or income in the current year consolidated statement of income.
Liability to unit-linked policyholders is classified as financial liabilities at fair value through profit or loss. Refer to Note 2c for the accounting policy of financial liabilities at fair value through profit or
loss.
Funds received from customers for non-sharia unit-linked products are reported as gross premiums in the consolidated statement of income. Subsidiary’s liabilities to non-sharia unit-linked
policyholders are recognised in the consolidated statement of financial position balance sheet for the amount received net of the portion of premium representing the Subsidiary’s revenue, with a
corresponding income statement recognition for the increase in liabilities to non-sharia unit-linked policyholders.
Any interest, gain or loss due to increases or decreases in market value of investments are recorded as income or expense, with a corresponding recognition of increase or decrease in liability to non-
sharia unit-linked policyholders in the consolidated statement of income and liability to non-sharia unit-linked policyholders in the consolidated statement of financial position balance sheet.
Funds received from customers for sharia unit-linked products is recognized as liabilities to sharia unit-linked policyholders in the consolidated statement of financial position balance sheet for the
amount received net of the Subsidiary’s fee ujrah portion in managing the revenue from unit-linked products.
aa. Marketable Securities Issued
Marketable securities issued by the Bank and its Subsidiaries, include floating rate notes, medium- term notes and travelers’ cheques, are initially measured at fair value plus directly attributable
transaction costs. Subsequently transactions costs are amortised using the effective interest rate up to the maturity of marketable securities issued.
Marketable securities issued are classified as financial liabilities at amortised cost. Refer to Note 2c for the accounting policy for financial liabilities at amortised cost.
ab. Fund Borrowings
Fund borrowings represent funds received from other banks, Bank Indonesia or other parties with the obligation of repayment in accordance with the requirements of the loan agreement.
Fund borrowings are initially measured at fair value plus directly attributable transaction costs. Fund borrowings are classified as financial liabilities at amortised cost. Refer to Note 2c for the accounting
policy for financial liabilities at amortised cost.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2011 AND 2010
Expressed in millions of Rupiah, unless otherwise stated
Appendix 544 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
ac. Subordinated Loans
Subordinated loans are initially measured at fair value plus directly attributable transaction costs. Subsequently transactions costs are amortised using the effective interest rate up to the maturity of
subordinated loans. Subordinated loans are classified as financial liabilities at amortised cost. Refer to Note 2c for the
accounting policy for financial liabilities at amortised cost.
ad. Income Tax
The tax expense comprises current and deferred tax. Tax is recognised in the consolidated statement of income statement, except to the extent that it relates to items recognised directly in
equity.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Where appropriate it establishes provisions
based on the amounts expected to be paid to the tax authorities.
The balance sheet liability method is applied to determine income tax expense in Bank Mandiri and Subsidiaries. Under the balance sheet liability method, deferred tax assets and liabilities are
recognised for all temporary differences arising between the tax base of assets and liabilities and their carrying amount in the consolidated statement of financial position balance sheet at each
reporting date. This method also requires the recognition of future tax benefits, to the extent that realisation of such benefits is probable.
Currently enacted or substantially enacted tax rates at the time deferred tax assets has been realised or deferred tax liabilities has been settled are used in the determination of deferred income
tax. The changes to the carrying value of deferred tax assets and liabilities due to the changes of tax rates are charged in the current year, except for transactions which previously have been directly
charged or credited to shareholders’ equity.
Amendments to taxation obligations are recorded when an assessment is received or, if appealed against, when the result of the appeal is determined. Management provides provision for future tax
liability at the amount that will be payable to the tax office on probable tax exposure, based on assessment as at the date of consolidated statement of financial position balance sheet. Significant
assumptions and estimation used in the provisioning calculation may involve element of uncertainty.
The estimated corporate income tax of Bank Mandiri and Subsidiaries is calculated for each company as a separate legal entity. Current tax assets and current tax liabilities for different legal
entities can not be set-off in the consolidated financial statements. Corporate tax payables of Bank Mandiri and Subsidiaries are presented as current tax payables in the consolidated statement of
financial position balance sheet, whilst other tax payables are presented as obligation due immediately refer to Note 2b.b.i regarding changes in accounting policy. Deferred tax assets are
presented net of deferred tax liabilities in the consolidated balance sheets.
