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 539 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
r. Fixed Assets and Leased Assets continued
i. Fixed assets continued In accordance with SFAS No. 47, “Accounting for Land”, all cost and expense incurred in relation
with the acquisition of the landright, such as license fee, survey and measurement cost, notary fee and taxes, are deferred and presented separately from the cost of the landright. The deferred cost
related to the acquisition of the landright was presented as part of Other Asset in the consolidated statement of financial position balance sheet, and amortised over the period of the related
landright using straight-line method.
In addition, SFAS No. 47 also states that landright is not amortised unless it meet certain required conditions.
SFAS No. 48, “Impairment of Assets” states that the carrying amounts of fixed assets are reviewed at each consolidated statement of financial position balance sheet date to assess
whether they are recorded in excess of their recoverable amounts and, when carrying value exceeds this estimated recoverable amount, assets are written down to their recoverable amount.
ii. Leased assets Bank Mandiri to apply SFAS No. 30 Revised 2007 of the Lease, effective beginning on or after 1
January 2008. Under SFAS No. 30 Revised 2007, determination of whether an agreement is a lease agreement or lease agreement containing the substance of the agreement based on the
inception date and whether the fulfillment of the agreement depends on the use of an asset and the agreement provides a right to use the asset. According to this revised SFAS, leases that
transfer substantially all the risks and rewards incidental to ownership, are classified as finance leases. Further, a lease is classified as operating leases, if the lease does not transfer
substantially all the risks and benefits incidental to ownership of assets.
Based on SFAS No. 30 Revised 2007, under a finance leases, Bank and Subsidiaries recognise assets and liabilities in its consolidated statement of financial position balance sheet at amounts
equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. Lease payment is apportioned between
the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the
remaining balance of the liability. Finance charges are reflected in the consolidated statement of income. Capitalised leased assets presented under fixed assets are depreciated over the shorter
of the estimated useful life of the assets and the lease term, if there is no reasonable certainty that the Bank will obtain ownership by the end of the lease term.
Under an operating lease, the Bank recognise lease payments as an expense on a straight-line basis over the lease term.
iii.Assets with Build Operate Transfer BOT agreement The Bank’s asset transferred to the investor in the Build, Operate, Transfer BOT agreement will
be re-transferred to the Bank at the end of the concession period. Upon the transfer of the BOT assets from the investor to the Bank, the Bank will record this asset by crediting BOT income if
there is certainty of the economic benefits from the assets or by crediting to deferred income if there is uncertainty of the economic benefits. BOT assets are recorded at fair value or
development costs agreed in the BOT contract or based on the acquisition costs, whichever is objective and reliable.
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
Non-earning assets of Bank Mandiri and the Subsidiaries’ assets consist of repossessed assets, abandoned properties, inter-office accounts and suspense accounts.
Refer to Note 2b.b.iv for changes in accounting policy on allowance for possible losses on Non- Earning Assets.
