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IABlE, STrong, EFFICIEnT
PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 512
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2013 AND 2012
Expressed in thousands of
¾
S Dollars, unless otherwise stated
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
e. Cash and cash equivalents
Cash and cash equivalents are cash on hand, cash in banks and time deposits with maturity periods of three months or less at the time of placement and which are not used as collateral or are not restricted.
The consolidated statements of cash flows have been prepared using the direct method by classifying the cash flows on the basis of operating, investing and financing activities. For the purpose of the consolidated statements of
cash flows, cash and cash equivalents are presented net of overdrafts.
f. Receivables
Trade receivables are amounts due from customers for coal and electricity sales or services performed in the ordinary course of business. Non-trade receivables are amount arising from transactions outside of the ordinary
course of business. If collection of the receivables is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, if the impact of discounting is significant, less provision for impairment.
Non-trade receivables to related parties are initially presented as non-current asset unless there are specific reasons for them to be presented as current assets in the consolidated statements of financial position.
g. Inventories
Coal inventories are stated at the lower of cost or net realisable value. Cost is determined based on the average cost method. The cost of coal inventories includes mining costs, other direct costs and an appropriate portion of
fixed and variable overheads. It excludes borrowing costs. The net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make
the sale.
Spare parts, fuel, lubricants and supplies are valued at cost less a provision for obsolete and slow moving inventory. Cost is determined based on the average cost method. A provision for obsolete and slow moving
inventory is determined on the basis of estimated future usage or sale of individual inventory items. Supplies of maintenance materials are charged to production costs in the year or period in which they are used.
h. Financial assets
