PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004 and 2003 Expressed in rupiah, unless otherwise stated
12
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued k. Leases
Lease transactions are accounted for under the capital lease method when the required capitalization criteria under PSAK No. 30, “Accounting for Leases” are met. Otherwise, lease
transactions are accounted for under the operating lease method. Assets under capital lease presented as part of “Property, Plant and Equipment” in the consolidated balance sheets are
recorded based on the present value of the lease payments at the beginning of the lease term plus residual value option price to be paid at the end of the lease period. Depreciation of leased
assets is computed based on methods and estimated useful lives used for similar property, plant and equipment acquired under direct ownership.
Gain on sale and leaseback transaction is deferred and amortized using the same basis and methods as referred to above.
Obligations under capital lease are presented at the present value of the remaining lease payments to be made.
l. Capitalization of Borrowing Costs
In accordance with the revised PSAK No. 26, “Borrowing Costs”, interest charges and foreign exchange differences incurred on borrowings and other related costs to finance
the construction or installation of major facilities are capitalized. Capitalization of these borrowing costs ceases when the construction or installation is completed and the related asset is ready for
its intended use.
m. Deferred Charges
Expenditures whose benefits extend over one year are deferred and amortized over the periods benefited using the straight-line method presented as part of “Other Non-Current Assets”.
In accordance with PSAK No. 47, “Accounting for Land”, costs incurred in connection with the acquisitionsrenewal of landrights, such as legal fees, land remeasurement fees, notarial fees,
taxes and other expenses, are deferred and amortized using the straight-line method over the legal terms of the related landrights.
n. Revenue and Expense Recognition
Revenues are recognized when the products are delivered and the risks and benefits of ownership are transferred to the customers andor when services are rendered. Cost and expenses are
generally recognized and charged to operations when they are incurred.
o. Retirement Benefits
The Company has a defined contribution retirement plan covering all of its qualified permanent employees. Contributions are funded and consist of the Company’s and the employees’
contributions computed at 10 and 5, respectively, of the employees’ pensionable earnings. On the other hand, the Subsidiaries do not operate any pension plan for the benefit of their
employees. Retirement benefit expenses for those Subsidiaries are accrued based on the government regulations.
PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004 and 2003 Expressed in rupiah, unless otherwise stated
13
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued o. Retirement Benefits continued
