Recognition of revenues and expenses i

PT XL AXIATA Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2007, 2008 AND 2009; AND 31 MARCH 2009 AND 2010 Expressed in millions of Rupiah, unless otherwise stated Page 16

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

h. Fixed assets and depreciation continued

The Company evaluates its fixed assets for impairment whenever events and circumstances indicate that the carrying amount of the assets may not be recoverable. When the carrying amount of an asset exceeds its estimated recoverable amount, the asset is written down to its estimated recoverable amount, which is determined based upon the greater of its net selling price or value in use. The accumulated costs of network equipment are initially capitalised as Assets Under Construction. These costs are subsequently reclassified as fixed-asset accounts when the assets are put into service. Subsequent costs are included in the asset’s carrying amount and recognised as a separate asset, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of replaced parts is written off. The cost of upgrading software is capitalised and the previously recorded balance is written off at the time the software upgrade is performed. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. When assets are retired or otherwise disposed of, their carrying values and the related accumulated depreciation are eliminated from the consolidated financial statements, and the resulting gains and losses on the disposal of fixed assets are recognised in the respective period’s statement of income. In 2007, DSAK issued PSAK 16 Revised 2007, “Fixed Assets”. The PSAK is effective for the preparation of financial statements covering periods beginning on or after 1 January 2008. Under PSAK 16 Revised 2007, the Company has to choose the cost model or revaluation model as their accounting policy in measuring costs of acquisition. The Company has chosen the cost model. According to PSAK 16 Revised 2007, the initial estimate of the cos ts of dismantling and removing a fixed asset and restoring the site on which it is located shall be capitalised as acquisition cost. In 2008, the Company recorded the estimated dismantlement and restoration costs of Base Transceiver Stations “BTS” as part of acquisition cost. The amount of the provision is determined based on the lease contracts; however, where contracts do not specify the amount of the obligation, the Company uses its best estimate. The management conducts a regular review of the estimation used. Change in economic useful lives estimation On 1 January 2008, the Company changed the estimated useful lives of certain components of other network equipment from 10 ten and 8 eight years 10 and 12.5 to 4 four and 5 five years 25 and 20 to reflect current asset useful life and depreciated over the remaining period of its new useful life. On 1 March 2010, the Company changed the estimated useful lives of certain components of other network equipment from 8 eight years 12.5 to 5 five years 20 to reflect current asset useful life and depreciated over the remaining period of its new useful life. PT XL AXIATA Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2007, 2008 AND 2009; AND 31 MARCH 2009 AND 2010 Expressed in millions of Rupiah, unless otherwise stated Page 17

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued