PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2011 AND 2010
Expressed in millions of Rupiah, unless otherwise stated
Appendix 540 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
s. Investments in Shares
Investments in shares represent long-term investments in non-publicly-listed companies and temporary investments in debtor companies arising from conversion of loans to equity.
Investments in shares representing ownership interests of 20.00 to 50.00 are accounted for using the equity method. Under this method, investments are stated at cost and adjusted for the
Bank’s proportionate share in the net equity of the investees and reduced by dividends earned since the acquisition date net of by allowance for impairment losses.
Prior to 1 January 2011, allowance for impairment losses on temporary investments from debt to equity swaps are determined using Bank Indonesia criteria set out in Bank Indonesia Regulation No.
72PBI2005 dated 20 January 2005 on “Asset Quality Ratings for Commercial Banks”. This regulation classifies temporary investments from debt to equity swaps into the following
classifications:
Holding Period Current
Up to 1 year Substandard
More than 1 year up to 4 years Doubtful
More than 4 years up to 5 years Loss
More than 5 years or the temporary investment has not been liquidated despite of the investee’s has accumulative profits
Temporary investment is written-off from the consolidated statement of financial position balance sheet if it is held for more than 5 years in accordance with Bank Indonesia Regulation No.
72PBI2005 dated 20 January 2005 on “Asset Quality Ratings for Commercial Banks”.
Investment in shares with ownership below 20 are classified as financial assets available for sale. Refer to Note 2c for the accounting policy of financial assets available for sale.
Goodwill is recognised, when there is a difference between the acquisition cost and the Bank’s portion of the fair value of identified assets and liabilities at the acquisition date. Goodwill is
presented as other assets. Starting 1 January 2011, with the effective implementation of SFAS No. 22 Revised 2010 “Business Combination”, Goodwill is not amortised but subject to regular
impairment assessment. Goodwill balance as at 31 December 2010 is no longer amortised, but subject to regular impairment assessment. Prior to 1 January 2011, Goodwill is amortised as
expense over the period using the straight-line method, unless there is other method considered more appropriate in certain conditions. The Goodwill amortisation period is 5 five years, but a
longer amortisation period may be applied with maximum 20 years period with appropriate basis.
t. Allowance for Possible Losses on Non-Earning Assets
