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
36
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued u. Financial instruments continued
i. Financial assets continued d. Available-for-sale financial assets
Available-for-sale investments are non-derivative financial assets that are intended to be held for indefinite period of time, which may be sold in response to needs for liquidity or
changes in interest rates, exchange rates or that are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or
loss. Available-for-sale financial assets consist of bonds and mutual funds which are recorded as other current financial assets.
Available-for-sale securities are stated at fair value. Unrealized holding gains or losses on available-for-sale securities are excluded from income of the current period and are
reported as a separate component in the equity section of the consolidated statements of financial position until realized. Realized gains or losses from the sale of available-for-sale
securities are recognized in the consolidated statements of comprehensive income, and are determined on the specific identification basis. A decline in the fair value of any
available-for-sale securities below cost that is deemed to be other than temporary is charged to the consolidated statement of comprehensive income.
ii. Financial liabilities The Company and subsidiaries classify their financial liabilities as i financial liabilities at fair
value through profit or loss or ii financial liabilities measured at amortized cost. The Company and subsidiaries’ financial liabilities include trade payables and other payables,
accrued expenses, loans and other borrowings which consist of short-term bank loans, obligations under capital lease, two step loans, bonds and notes, and bank loans.
a. Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss are financial liabilities classified as
held for trading. A financial liability is classified as held for trading if it is incurred principally for the purpose of selling or repurchasing them in the near term and for which
there is evidence of a recent actual pattern of short-term profit taking. No financial liabilities were categorized as held for trading as of September 30, 2014 and
December 31, 2013. b. Financial liabilities measured at amortized cost
Financial liabilities that are not classified as liabilities at fair value through profit or loss fall into this category and are measured at amortized cost. Financial liabilities measured at
amortized cost are trade payables, other payables, accrued expenses, loans, bonds and notes.
iii. Offsetting financial instruments Financial assets and liabilities are offset and the net amount is reported in the consolidated
statementof financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the assets and settle the
liabilities simultaneously.
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
37
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued u. Financial instruments continued
iv. Fair value of financial instruments Fair value is the amount for which an asset could be exchanged, or liability settled, in an
arms’ length transaction. The fair value of financial instruments that are traded in active markets at each reporting date
is determined by reference to quoted market prices, without any deduction for transaction costs.
For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may includeusing recent arm’s length
market transactions, reference to the current fair value of another instrument that is substantially the same,a discounted cash flow analysis or other valuation models.
An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 44.
v. Impairment of financial assets The Company and subsidiaries assess the impairment of financial assets if there is objective
evidence that a loss event has a negative impact on the estimated future cash flows of the financial asset. Impairment is recognized when the loss event can be reliably estimated.
Losses expected as a result of future events, no matter how likely, are not recognized. Impairment loss on financial assets carried at cost is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. Cash flows relating to short-term
receivables are not discounted if the effect of discounting is immaterial. When a decline in the fair value of an available-for-sale financial asset has been recognized in
other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss that had been recognized in other comprehensive income is recognized in
profit or loss as an impairment loss. The amount of the cumulative loss is the difference between the acquisition cost net of any principal repayment and amortization and current fair
value, less any impairment loss on that financial asset previously recognized. vi. Derecognition of financial instrument
The Company and subsidiaries derecognize a financial asset when the contractual rights to the cash flows from the financial asset expire, or when the Company and subsidiaries transfer
substantially all the risks and rewards of ownership of the financial asset. The Company and subsidiaries derecognize a financial liability when the obligation specified
in the contract is discharged or cancelled or expired.
v. Treasury stock
Reacquired Company shares of stock are accounted for at their reacquisition cost and classified as “Treasury Stock” and presented as a deduction to equity. The cost of treasury stock
soldtransferred is accounted for using the weighted average method. The portion of treasury stock transferred for employees ownership program is accounted for at its fair value. The
difference between the cost and the proceeds from the saletransfer value of treasury stock is credited to “Additional Paid-in Capital”.
