PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009, 2008 AND 2007
Expressed in millions of Rupiah, unless otherwise stated
Appendix 521 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued r.
Allowance for Possible Losses on Earning and Non-Earning Assets continued
The outstanding balances of earning assets classified as loss are written off against the respective allowance for possible losses when the management of Bank Mandiri and Subsidiaries believes that
the earning assets are uncollectible. Recoveries of earning assets previously written off are recorded as an addition to the allowance for possible losses during the year. If the recovery
exceeds the principal amount, the excess will be recognised as interest income.
In accordance with Bank Indonesia Regulation No. 72PBI2005 dated 20 January 2005 on “Asset Quality Ratings for Commercial Banks”, starting from 20 January 2006, the Bank is also required to
make a special allowance for possible losses on non-earning assets, such as repossessed assets, abandoned properties, interbranch accounts and suspense accounts.
This regulation classifies repossessed assets and abandoned properties into the following classification:
Period Current
Up to 1 year Substandard
More than 1 year up to 3 years Doubtful
More than 3 years up to 5 years Loss
More than 5 years The classification for interbranch and suspense accounts are as follows:
Period Current
Up to 180 days Loss
More than 180 days
s. Fixed Assets and Leased Assets
i. Fixed assets Prior to 1 January 2008, fixed assets are stated at cost except for certain fixed assets that were
revalued in 1979, 1987 and 2003 in accordance with Government regulations less accumulated depreciation except for land which is not depreciated. The corresponding revaluation increments
were credited to “Fixed Assets Revaluation Reserve” under the shareholders’ equity in the consolidated balance sheets.
Effective 1 January 2008, Bank Mandiri applied SFAS No. 16 revised 2007, “Fixed Assets”, which supersedes SFAS No. 16 1994, “Fixed Assets and Other Assets”, and SFAS No. 17
1994, “Accounting for Depreciation”. Bank Mandiri and subsidiaries chose the cost model, and therefore, the balance of fixed assets revaluation reserve at the first time SFAS No. 16 revised
2007 was presented in shareholders’ equity section in the consolidated balance sheet, were reclassified to consolidated retained earnings in 2008 Note 32c.
Fixed assets except for land is stated at cost less accumulated depreciation and impairment losses. Such cost includes the cost of replacing part of the fixed assets when that cost is incurred,
if the recognition criteria are met. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the fixed assets as a replacement if the recognition criteria
are satisfied. All other repairs and maintenance costs that do not have future economics benefit are recognised in the consolidated statement of income as incurred.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009, 2008 AND 2007
Expressed in millions of Rupiah, unless otherwise stated
Appendix 522 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued s.
Fixed Assets and Leased Assets continued
i. Fixed Assets continued Depreciation is calculated using the straight-line method over the estimated useful lives of the
assets as follows: Years
Buildings 20
Furniture, fixtures, office equipment and computer equipmentsoftware and vehicles 4-5
Fixed assets are derecognised upon disposal or when no future economic benefits are expected from their use or disposal. Any gain or loss arising from derecognition of the asset calculated as
the difference between the net disposal proceeds and the carrying amount of the asset is included in consolidated statement of income in the year the asset is derecognised.
The asset’s residual values, useful lives and methods of depreciation are reviewed, and adjusted prospectively if appropriate, at each financial year end.
Construction in progress is stated at cost and is presented as part of fixed assets. Accumulated costs are reclassified to the appropriate fixed assets account when the assets are substantially
complete and are ready for their intended use.
In accordance with SFAS No. 47, “Accounting for Land”, all cost and expense incurred in relation with the acquisition of the landright, such as license fee, survey and measurement cost, notary
fee and taxes, are deferred and presented separately from the cost of the landright. The deferred cost related to the acquisition of the landright was presented as part of Other Asset in the
consolidated balance sheet, and amortised over the period of the related landright using straight- line method.
In addition, SFAS No. 47 also states that landright is not amortised unless it meet certain required conditions.
SFAS No. 48, “Impairment of Assets” states that the carrying amounts of fixed assets are reviewed at each balance sheets date to assess whether they are recorded in excess of their
recoverable amounts and, when carrying value exceeds this estimated recoverable amount, assets are written down to their recoverable amount.
ii. Leased assets Effective 1 January 2008, the Statement of Financial Accounting Standard SFAS No. 30
revised 2007, “Leases” supersedes SFAS No. 30 1990 “Accounting for Leases”. Based on SFAS No. 30 revised 2007, the determination of whether an arrangement is, or contains a lease
is based on the substance of the arrangement at inception date and whether the fulfillment of the arrangement is dependent on the use of a specific asset and the arrangement conveys a right to
use the asset. Under this revised SFAS a lease that transfers substantially all the risk and rewards incidental to ownership of an assets is classified as finance lease. Moreover, leases
which do not transfer substantially the risks and reward incidental to ownership of the leased item are classified as operating leases.
