Basis of Preparation of the Consolidated Financial Statements continued Changes in accounting policies in current year

PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010, 2009 AND 2008 Expressed in millions of Rupiah, unless otherwise stated Appendix 515 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued b. Changes in accounting policies in current year continued i. Financial assets and liabilities continued

A. Financial assets continued

c Held-to-maturity financial assets continued Held-to-maturity financial assets are initially recognised at fair value including transaction costs and subsequently measured at amortised cost, using the effective interest method. Interest income on held-to-maturity financial assets is included in the consolidated statement of income and reported as “Interest income”. In the case of impairment, the impairment loss is reported as a deduction from the carrying value of the investment and recognised in the consolidated financial statements as “Allowance for impairment losses”. d Available-for-sale financial assets Available-for-sale are 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 or financial assets at fair value through profit or loss. Available-for-sale financial assets are initial recognised at fair value, plus transaction costs, and measured subsequently at fair value with gains or losses arising from the changes in fair value being recognised in the statement of changes in equity, except for impairment losses and foreign exchange gains or losses, until the financial assets is derecognised. If an available-for-sale financial asset is determined to be impaired, the cumulative unrealised gain or loss arising from the changes in fair value previously recognised in the statement of changes in equity is recognised in the consolidated statement of income. Interest income is calculated using the effective interest method, and foreign currency gains or losses on monetary assets classified as available for-sale are recognised in the consolidated statement of income. Recognition The Bank uses trade date accounting for regular way contracts when recording marketable securities and Government Bonds transactions whilst for other financial assets use settlement date. Financial assets that are transferred to a third party but not qualify for derecognition are presented in the consolidated balance sheets as “Pledged assets”, if the transferee has the right to sell or repledge them. PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010, 2009 AND 2008 Expressed in millions of Rupiah, unless otherwise stated Appendix 516 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued b. Changes in accounting policies in current year continued i. Financial assets and liabilities continued