PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 With comparative figures for 2005
Expressed in rupiah, unless otherwise stated
15
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
q. Derivative Instruments continued The accounting for changes in the fair value of a derivative depends on the documented use of the
derivative and the resulting designation. The Company has entered into forward and option currency contracts, and also cross currency interest rate swap to hedge market risks arising from
fluctuations in exchange rates relating to its foreign currency denominated loans. However, based on the specific requirements for hedge accounting under PSAK No. 55, the said instruments can
not be designated as hedge activities for accounting purposes and accordingly, changes in the fair value of such instruments are recorded directly in earnings.
r. Corporate Income Tax
Current tax expense is provided based on the estimated taxable income for the year. Deferred tax assets and liabilities are recognized for temporary differences between the financial and the tax
bases of assets and liabilities at each reporting date. Future tax benefits, such as the carry-forward of unused tax losses, are also recognized to the extent that realization of such benefits is probable.
Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied to the period when any of the assets is realized or any of the liabilities is settled, based on tax rates
and tax laws that have been enacted or substantively enacted at the balance sheet date.
Amendment to a tax obligation is recorded when an assessment is received or, if appealed, when the result of the appeal is determined.
s. Segment Reporting
The Company and Subsidiaries’ businesses are grouped into three major operating businesses: cement, ready mix concrete and other businesses. Financial information on business segments is
presented in Note 19.
t. Stock Issuance Costs
Based on decision letter No. KEP-06PM2000 dated March 13, 2000 of the Chairman of Bapepam, all costs related to the issuance of equity securities should be offset against additional
paid-in capital.
u. Earnings per Share
Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the year, which is 3,681,231,699 shares in 2006 and 2005.
v. Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect
amounts reported therein. Due to inherent uncertainty in making estimates, actual results reported in future periods may be based on amounts that differ from those estimates.
PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 With comparative figures for 2005
Expressed in rupiah, unless otherwise stated
16
3. CASH AND CASH EQUIVALENTS
