PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
December 31, 2011 and 2010 and For the Years then Ended
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Day 1 ProfitLoss Where the transaction price in a non-active market is different from the fair value of other
observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable market, the Group recognize
the difference between the transaction price and fair value a Day 1 profitloss in the consolidated statement of comprehensive income unless it qualifies for recognition as some
other type of asset. In cases where the data is not observable, the difference between the transaction price and model value is only recognized in the consolidated statement of
comprehensive income when the inputs become observable or when the instrument is derecognized. For each transaction, the Group determines the appropriate method of
recognizing the “Day 1” profitloss amount. Financial Assets
1. Financial Assets at FVPL Financial assets at FVPL include financial assets held for trading and financial assets
designated upon initial recognition at FVPL. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are
also classified as held for trading unless they are designated as effective hedging instruments.
Financial assets may be designated at initial recognition at FVPL if the following criteria are met:
a. the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the financial assets or recognizing gains or
losses on them on a different basis; or
b. the assets are part of a group of financial assets, financial liabilities or both which
are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy; or
c. the financial instruments contains an embedded derivative, unless the embedded
derivative does not significantly modify the cash flows or it is clear, with little or no analysis, that it would not be separately recorded.
Financial assets at FVPL are recorded in the consolidated statements of financial position at fair value. Changes in fair value are recognized directly in the consolidated
statements of comprehensive income. Interest earned is recorded as interest income, while dividend income is recorded as part of other income according to the terms of the
contract, or when the right of payment has been established. As of December 31, 2011 and 2010, this category includes short term investments –
securities bonds, units of mutual fund, shares and warrants which are traded in the Indonesia Stock Exchange and Segregated funds net assets – unit link units of mutual
fund and shares that are traded in the Indonesia Stock Exchange, and Segregated funds net assets – sharia units of mutual fund, other assets - derivative receivables.
2. Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are not entered into with the
intention of immediate or short-term resale and are not classified as financial assets at FVPL, HTM investments or AFS financial assets.
PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
December 31, 2011 and 2010 and For the Years then Ended
- 31 - After initial measurement, loans and receivables are subsequently measured at
amortized cost using the effective interest method, less allowance for impairment. Amortized cost is calculated by taking into account any discount or premium on
acquisition and fees and costs that are an integral part of the effective interest rate. The amortization is included as part of interest income in the consolidated statements of
comprehensive income. The losses arising from impairment are recognized in the consolidated statement of comprehensive income.
As of December 31, 2011 and 2010, this category includes cash and cash equivalents, short-term investments time deposits, placement with other banks, and securities -
export bill receivables, securities purchased under agreements to resell, consumer finance receivables, factoring receivables, segregated funds net assets – unit link cash
and cash equivalents and investment receivables, segregated funds net assets - sharia cash and cash equivalents and investment receivables, loans, securities agent
receivables, other accounts receivable, and other assets security deposits and money transfers.
3. HTM Investments
HTM investments are non-derivative financial assets with fixed or determinable payments and fixed maturities for which the Group’ management has the positive
intention and ability to hold to maturity. When the Company or its subsidiaries sell or reclassify other than an insignificant amount of HTM investments before maturity, the
entire category would be tainted and reclassified as AFS financial assets. After initial measurement, these investments are subsequently measured at amortized
cost using the effective interest method, less impairment in value. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees that
are an integral part of the effective interest rate. The amortization is included as part of interest income in the consolidated statements of comprehensive income. Gains and
losses are recognized in the consolidated statements of comprehensive income when the HTM investments are derecognized and impaired, as well as through the
amortization process using effective interest method. As of December 31, 2011 and 2010, this category includes short term investments –
securities Bank Indonesia Intervention, Certificate of Bank Indonesia, Credit Linked Note, Republic of Indonesia – ROI Loans, bonds, export bill receivables, segregated
funds net assets – unit link bonds, and segregated funds net assets – sharia sharia bonds.
4. AFS Financial Assets AFS financial assets are those which are designated as such or not classified in any of
the other categories. They are purchased and held indefinitely and may be sold in response to liquidity requirements or changes in market conditions.
After initial measurement, AFS financial assets are measured at fair value with unrealized gains or losses recognized as other comprehensive income - “Unrealized
gain loss on increase decline in value of AFS financial assets” until the investment is derecognized, or determined to be impaired, at which time the cumulative gain or loss is
reclassified to the profit and loss and removed from “Unrealized gain loss on decline in value AFS financial assets”.
As of December 31, 2011 and 2010, this category includes short-term investment in bonds, Republic of Indonesia – ROI Loans, shares that are traded in Indonesia Stock
Exchange, and certain investments in shares Note 17.
