PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2014 AND 2013
Expressed in millions of Rupiah, unless otherwise stated
Appendix 542 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
z. Insurance Contract continued
Liability for future policy benefits The liabilities for future policy benefits represent the present value of estimated future policy
benefits to be paid to policyholders or their heirs less present value of estimated future premiums to be received from the policyholders and recognised consistently with the recognition of premium
income. The liabilities for future policy benefits are determined and computed based on certain formula by the Subsidiary’s actuary or registered independent actuary.
The Subsidiaries calculate the liability for future policy benefits using Gross Premium Reserve method that reflect the present value of estimated payments throughout the guaranteed benefits
including all the embedded options available, the estimated present value of all handling costs incurred and also considering the future premium receipt.
Increase decrease in liabilities for future policy benefits is recognised in the current year’s consolidated statement of comprehensive income.
Liability to unit-linked policyholders classified as insurance liability. The liability to unit-linked policyholders is recognised at the time the funds received are converted
into units, net of related expenses and will increase or decrease in accordance with effective net asset value.
Funds received from customers for non-sharia unit-linked products are reported as gross premiums in the consolidated statements of comprehensive income. Liabilities to unit-linked
policyholders are recognised in the consolidated statement of financial position computed based on unearned premium reserves using daily method from the cost of insurance to cover mortality
risk plus reserves for the accumulated invested fund of 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 unit-linked policyholders in the statements of income and liability to unit-linked policyholders in the statement of financial position.
Funds received from customers for sharia unit-linked products is recognized as liabilities to unit- linked policyholders in the statement of financial position for the amount received net of the
portion reprensenting the Company’s fees in managing the unit-linked product revenue.
Unexpired Risk Reserve URR A liability for contractual benefits that are expected to be incurred in the future is recorded when
the premiums are recognised. The liability is determined as the sum of the expected discounted value of the benefit payments and the future administration expenses that are directly related to
the insurance contract, less the expected discounted value of the theoretical premiums that would be required to meet the benefits and administration expenses based on the valuation
assumptions used the valuation premiums. The liability is based on assumptions as to mortality, persistency, maintenance expense and investment income that are established at the time the
contract is issued. A margin for adverse deviations is included in the assumptions.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2014 AND 2013
Expressed in millions of Rupiah, unless otherwise stated
Appendix 543 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
aa. Marketable Securities Issued
Marketable securities issued by the Bank and its Subsidiaries, include bonds, subordinated 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 minus 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.
ac. Subordinated Loans
Subordinated loans are initially measured at fair value minus 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 comprehensive income, except to the extent that it relates to items recognised
directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Group’s management periodically evaluates the implementation of prevailing tax regulations especially those that are subject to further interpretation on its implementation, including
evaluation on tax assessment letters received from tax authorities. Where appropriate the Bank 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 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.
