Related party transactions SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

PT XL AXIATA Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2007, 2008 AND 2009; AND 31 MARCH 2009 AND 2010 Expressed in millions of Rupiah, unless otherwise stated Page 15

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

g. Leases continued i

As lessee continued Leases whereby the Company has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased assets and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the consolidated statement of income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The fixed asset acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term. ii As lessor When assets are leased out under a finance lease, the present value of the lease payments is recognised as receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance lease income. Lease income is recognised over the term of the lease using the net investment method, which reflects a constant periodic rate of return. When assets are leased out under an operating lease, the asset is included in the balance sheet based on the nature of the asset. Lease income is recognised over the term of the lease on a straight-line basis.

h. Fixed assets and depreciation

Fixed assets are stated at acquisition cost, which includes any applicable import taxes, import duties, freight costs, handling costs, storage costs, site preparation cost s, installation costs, internal labour costs, and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, less accumulated depreciation. Depreciation is applied from the date the assets are put into service or when the assets are ready for service, using the straight-line method over their estimated useful lives and results in the following annual percentages of cost: Buildings : 5, 12.5 Network equipment - GSM tower : 6.25 - Fibre optic : 10 - Other network equipment : 10, 12.5, 20, 25, 50 Leasehold improvements : 25 Machinery and equipment : 25 Furniture and fixtures : 25 Support systems : 25 Motor vehicles : 25 Land is stated at cost and is not depreciated. PT XL AXIATA Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2007, 2008 AND 2009; AND 31 MARCH 2009 AND 2010 Expressed in millions of Rupiah, unless otherwise stated Page 16

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued