PT SUMMARECON AGUNG Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2017 and for the Six-Month Periods Then Ended Expressed in thousands of Indonesian Rupiah, unless otherwise stated
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED k. Investment properties continued
For a transfer from investment properties to owner-occupied property, the Company uses the cost method at the date of change in use. If an owner-occupied property becomes an investment property, the Company records the
investment property in accordance with the fixed assets policies up to the date of change in use.
l. Leases
The Group classifies a lease based on the extent to which risks and rewards incidential to the ownership of a leased asset are vested upon the lessor or the lessee, and on the substance of the transaction rather than the form of the
contract, at inception date. Finance lease
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an asset.
Operating lease A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to
ownership of the leased asset. Accordingly, the lease payments received by the Group as lessors are recognized as income using the straight-line method over the lease term.
m. Capitalization of borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of the related asset. Other borrowing costs are recognized as expenses in the period in
which they are incurred. Borrowing costs may include interest, finance charges in respect of finance leases recognized in accordance with PSAK No. 30 Revised 2011 and foreign exchange differences arising from foreign currency
borrowings to the extent that they are regarded as adjustment to interest costs. Capitalization of borrowing costs commences when the activities to prepare the qualifying asset for its intended use
have started and the expenditures for the qualifying asset and the borrowing costs have been incurred. Capitalization of borrowing costs ceases when all the activities necessary to prepare the qualifying asset for its
intended use are substantially completed. The capitalization of borrowing costs is suspended if there are prolonged periods when development activity is
interrupted. Interest is also capitalized on the purchase cost of a site property acquired specifically for development, but only where activities necessary to prepare the asset for development are in progress.
n. Impairment of non-financial asset value
The Group assesses at each reporting date whether there is an indication that assets may be impaired. If any such indication exists, or when annual impairment testing for assets i.e., an intangible asset with an indefinite useful life, or
an intangible asset not yet available for use is required, the Group makes an estimate of the recoverable amounts of the respective assets.
An asset’s recoverable amount is the higher of the asset’s or its CGU’s fair value less costs to sell and its value in use, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent
of those from other assets or group of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing the value in use, the
estimated net future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs
to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used to determine the fair value of the asset. These calculations are corroborated by
valuation multiples or other available fair value indicators. Impairment losses of continuing operations, if any, are recognized in the consolidated statement of profit or loss and
other comprehensive income under expense categories that are consistent with the functions of the impaired assets.
PT SUMMARECON AGUNG Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2017 and for the Six-Month Periods Then Ended Expressed in thousands of Indonesian Rupiah, unless otherwise stated
22
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED n. Impairment of non-financial asset value continued
A previously recognized impairment loss for an asset is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case,
the carrying amount of the asset is increased to its recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceeds
the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.
Reversal of an impairment loss is recognized in the consolidated statements of profit or loss and other comprehensive income. After such a reversal, the depreciation charge on the said asset is adjusted in future periods to allocate the
asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
o. Stock issuance costs
