PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of September 30, 2014 and for the Nine months Period Then Ended unaudited
Figures in tables are expressed in billions of rupiah, unless otherwise stated
24
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued d. Business combinations continued
Based on PSAK 38 Revised 2012, “Common Control Business Combination”, the transfer of assets, liabilities, shares or other ownership instruments among the companies under common
control would not result in a gain or loss. Since the restructuring transaction between entities under common control does not result in a change of the economic substance of the ownership of
assets, liabilities, shares or other instruments of ownership, which are exchanged, assets or liabilities transferred are recorded at book value using the pooling-of-interests method. In applying
the pooling-of-interests method, the components of the financial statements for the period during which the restructuring occurred must be presented in such a manner as if the restructuring has
occurred since the beginning of the earliest period presented. The excess of consideration paid or received over the carrying value of interest acquired, net of income tax, is directly recognized to
equity and presented as “Additional Paid-in Capital” under the equity section of the consolidated statement of financial position.
At the initial application of PSAK 38 Revised 2012, all balances of the Difference In Value of Restructuring Transactions of Entities under Common Control was reclassified to “Additional Paid-
in Capital” in the consolidated statement of financial position.
e. Cash and cash equivalents
Cash and cash equivalents comprises cash on hand and in banks and all unrestricted time deposits with an original maturity of three months or less at the time of placement.
Time deposits with maturities of more than three months but not more than one year are presented as other current financial assets.
f. Investments in associated companies
Investments in companies where the Company and subsidiaries have 20 to 50 of the voting rights, and through which the Company and subsidiaries exert significant influence, but not
control, over the financial and operating policies are accounted for using the equity method. Under this method, the Company and subsidiaries recognize their proportionate share in the income or
loss of the associated companies from the date that significant influence commences until the date that significant influence ceases. When the Company and subsidiaries’ share of loss exceeds the
carrying amount of the investments in associated companies, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Company and
subsidiaries have incurred legal or constructive obligations or made payments on behalf of the associated companies.
Investment in a joint venture is accounted for using the equity method whereby the participation in a joint venture is initially recorded at cost and subsequently adjusted for changes that occur after
the acquisition in the share of the venturer of the joint venture’s net assets. The Company and subsidiaries determine at each reporting date whether there is any objective
evidence that the investments in the associated companies are impaired. If there is, the Company and subsidiaries calculate and recognize the amount of impairment as the difference between the
recoverable amount of the investments in associated companies and their carrying value. These assets are included in long-term investment in the consolidated statement of financial
position.
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of September 30, 2014 and for the Nine months Period Then Ended unaudited
Figures in tables are expressed in billions of rupiah, unless otherwise stated
25
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued f. Investments in associated companies continued
The functional currency of PT Pasifik Satelit Nusantara “PSN” and PT Citra Sari Makmur “CSM” is the United States dollar “U.S. dollars” and the functional currency of Telin Malaysia is
the Malaysian ringgit “MYR”. For the purpose of reporting these investments using the equity method, the assets and liabilities of these companies as of the statement of financial position date
are translated into Indonesian rupiah using the rate of exchange prevailing at that date, while revenues and expenses are translated into Indonesian rupiah at the average rates of exchange for
the year. The resulting translation adjustments are reported as part of translation adjustment in the equity section of the consolidated statement of financial position.
g. Trade and other receivables
Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost, less provision for impairment. This provision for impairment is made based on
management’s evaluation of the collectibility of outstanding amounts. Receivables are written off in the year during which they are determined to be uncollectible.
h. Inventories
Inventories consist of components, which are subsequently expensed or transferred to property and equipment upon use. Components represent telephone terminals, cables, and other spare
parts. Inventories also include Subscriber Identification Module “SIM” cards, Removable User Identity Module “RUIM” cards, handsets, set top box, wireless broadband modems, and blank
prepaid vouchers, which are expensed upon sale. The costs of inventories comprise of the purchase price, import duties, other taxes, transport,
handling, and other costs directly attributable to their acquisition. Inventories are recognized at the lower of cost and net realizable value. Net realizable value is the estimate of selling price less the
costs to sell. Cost is determined using the weighted average method for components, SIM cards, RUIM cards,
handsets, set top box, wireless broadband modem, and blank prepaid voucher. The amounts of any write-down of inventories below cost to net realizable value and all losses of
inventories are recognized as expense in the period in which the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realizable
value, is recognized as a reduction in the amount of general and administrative expenses in the year in which the reversal occurs.
Provision for obsolescence is primarily based on the estimated forecast of future usage of these items.
i. Prepaid expenses
Prepaid expenses are amortized over their future beneficial periods using the straight-line method.
j. Assets held for sale
Assets or disposal groups are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction rather than through continuing use and a sale is
considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.
Assets that meet the criteria to be classified as held for sale are reclassified from property and equipment and depreciation on such assets is ceased
.
