PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 520
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2014 AND 2013
Expressed in thousands of US Dollars, unless otherwise stated
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
u. Employee benefits continued
i Post employment benefits continued
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions, in excess of the greater of 10 of the fair value of plan assets or 10 of the present value of the defined benefit obligation, are
charged or credited to profit or loss over the employees expected average remaining working lives. For defined contribution plans the Group pays contributions to publicly or privately administered pension
insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expenses when they
become due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
ii Termination benefits
Termination benefits are payable when an employee’s employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The
Group recognises termination benefits when it is demonstrably committed to a termination and the entity has a detailed formal plan to terminate the employment of current employees without possibility of withdrawal.
Benefits falling due more than 12 months after the end of the reporting year are discounted to their present value.
v. Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from
the proceeds.
w. Earnings per share
Basic earnings per share are calculated by dividing the profit for the year attributable to the equity holders of the Company by the weighted-average number of ordinary shares outstanding during the year.
Diluted earnings per share are calculated by dividing the profit for the year attributable to owners of the parent of the Company adjusted for finance costs and foreign exchange gains or losses on convertible bonds and their related tax
effects, by the weighted-average number of issued and fully paid-up shares during the year, assuming that all options have been exercised and all convertible bonds have been converted.
x. Dividend distributions
Dividend distributions to the Company’s shareholders are recognised as liabilities in the consolidated financial statements in the period when the dividends declared.
y. Business combinations of entities under common control
Business combinations of entities under common control are accounted for using the pooling-of-interests method. The difference between the consideration received and the carrying value of each restructuring transaction among
entities under common control is recorded as part of additional paid-in capital in the equity section of the consolidated statement of financial position.
z. Revenue and expense recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of Value-Added Tax “VAT”, returns, rebates and
discounts and after eliminating intra-group sales. The Group recognises revenue when the amount of revenue can be reliably measured; it is probable that future
economic benefits will flow to the entity; and when specific criteria have been met for each of the Group’s activities as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the
type of transaction and the specifics of each arrangement.
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PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 521
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2014 AND 2013
Expressed in thousands of US Dollars, unless otherwise stated
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
z. Revenue and expense recognition continued
i. Sales of coal
Revenue from coal sales is recognised when all of the following conditions are fulfilled: -
the Group has transferred to the buyer the significant risks and rewards of ownership of the coal; -
the Group retains neither continuing managerial involvement nor effective control over the coal sold; -
the amount of revenue can be measured reliably; -
it is probable that the economic benefits associated with the transaction will flow to the Group; and -
the costs incurred or to be incurred with respect to the sales transaction can be measured reliably. The satisfaction of these conditions depends on the terms of trade with individual customers. Generally the risks
and rewards are considered to be transferred to the customer when the title and insurable risk of loss are transferred.
The Group’s coal sales can be subject to adjustment based on the inspection of shipments by the customer. In these cases, revenue is recognised based on the Group’s best estimate of the grade andor quantity at the time of
shipment, and any subsequent adjustments are recorded against revenue. Historically, the differences between estimated and actual grade andor quantity are not significant.
ii. Rendering of mining and logistics services
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised with reference to the stage of completion of the transaction at the
consolidated statement of financial position date. The outcome of a transaction can be estimated reliably when all of the following conditions are met:
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the transaction will flow to the Group;
- the stage of completion of the transaction at the end of the reporting year can be measured reliably; and
- the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
When the outcome of a transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the recognised expenses that are recoverable.
iii. Sales of electricity
Revenues generated from sales of electricity are recognised when the electrical output is delivered to the customers.
iv. Interest income
Interest income is recognised using the effective interest method. When a loan or receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at
the original effective interest rate of the instrument, and continues to unwind the discount as interest income. Interest income on impaired loans and receivables is recognised using the original effective interest rate.
v. Rental income
