PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 2006 Unaudited and 2005 Audited Expressed in millions of Rupiah, unless otherwise stated
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued g.
Securities Securities consist of securities traded in the money market such as, Certificates of Bank Indonesia,
medium term notes, promissory notes, commercial papers, export bills, securities traded on the capital market such as mutual fund units and securities traded on the stock exchanges such as shares of
stocks and bonds. Securities include bonds issued by the Government, that are not related to the recapitalization program
such as treasury bonds and foreign currency bonds. These bonds or notes are issued by the Government for the purpose of managing the Government’s funding requirements, and are obtained
through both primary and secondary markets. Investments in mutual fund units are stated at market value, which is the net value of assets of the
mutual funds at the balance sheet date. Any unrealized gains or losses at the balance sheet date are reflected in the current year’s profit or loss.
The value of securities is stated based on the classification of the securities, as follows: 1 Trading securities are stated at fair value. The unrealized gainslosses resulting from the
increasedecrease in fair value are recognized in the current year’s profit and loss. Upon the sale of securities in a trading portfolio, the difference between selling price and fair value per books is
recognized as a realized gain or loss on sale. 2 Available for sale securities are stated at fair value. Unrealized gainslosses resulting from the
increasedecrease in fair value are not recognized in the current year’s profit and loss but are presented as a separate component of shareholders’ equity. Gainslosses are recognized in profit
and loss upon realization. 3 Held to maturity securities are stated at cost adjusted for unamortized discounts or premiums.
For securities which are actively traded in organized financial markets, fair value is generally determined by reference to quoted market bid prices by the stock exchanges at the close of business
on the balance sheet date, adjusted for transaction costs necessary to realize the assets. For securities where there is no quoted market price, a reasonable estimate of the fair value is determined
by reference to the current market value of another instrument which is substantially the same or is calculated based on the expected cash flows of the underlying net asset base of securities. Any
permanent decline in the fair value of securities held to maturity and available for sale is charged to profit and loss in the year incurred.
Purchase and sale of securities transactions both for the customer and for the Bank are recognized in the consolidated financial statements when there is an agreement on securities transactions.
Securities are stated net of allowance for possible losses and unamortized interestpremium or discount. Premiums and discounts are amortized using the straight-line method.
Securities are derecognized from the balance sheet after the Bank has transferred all significant risk and rewards of the related securities.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 2006 Unaudited and 2005 Audited Expressed in millions of Rupiah, unless otherwise stated
20
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
