PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
December 31, 2012 and 2011 and January 1, 2011December 31, 2010 and For the Years then Ended December 31, 2012 and 2011
Figures are Presented in Millions of Rupiah, unless Otherwise Stated
- 42 - An item of property and equipment is derecognized upon disposal or when no future
economic benefits are expected from its use or disposal. When assets are sold or retired, the cost and related accumulated depreciation and amortization and any impairment loss
are eliminated from the accounts. Any gains or loss arising from de-recognition of property and equipment calculated as the difference between the net disposal proceeds, if any, and
the carrying amount of the item is included in the consolidated statement of comprehensive income in the year the item is derecognized.
The asset’s residual values, if any, useful lives and depreciation method are reviewed and adjusted if appropriate, at each financial year end.
Construction in Progress Construction in progress represents property and equipment under construction which is
stated at cost and is not depreciated. The accumulated costs will be reclassified to the respective property and equipment account and will be depreciated when the construction is
substantially complete and the asset is ready for its intended use.
s. Foreclosed Properties
Foreclosed properties are stated at the lower of carrying amount and fair value less costs to sell. The difference between between the value of the foreclosed properties
and the outstanding loan principal, if any, is charged to the current year consolidated statement of comprehensive income. The difference between the carrying value of the
foreclosed property and the proceeds from its sale is recognized as a gain or loss in the period the property was sold.
The costs of maintenance of foreclosed properties are charged to consolidated statement of comprehensive income when incurred.
The carrying amount of the property is written-down to recognize a permanent dimunition in value of the foreclosed property, which is charged to the current year consolidated
statement of comprehensive income. Management evaluates regulary the carrying value of foreclosed property. The carrying
amount of the property is written-down to recognize a permanent dimunition in value of the foreclosed property, which is charged to the current year consolidated statement of
comprehensive income.
t. Prepaid Expenses
Prepaid expenses are amortized over their beneficial or contract periods using the straight- line method.
u. Impairment of Non-Financial Assets
The Group assesses at each annual reporting period whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for
an asset is required, the Group makes an estimate of the asset’s recoverable amount.
PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
December 31, 2012 and 2011 and January 1, 2011December 31, 2010 and For the Years then Ended December 31, 2012 and 2011
Figures are Presented in Millions of Rupiah, unless Otherwise Stated
- 43 - An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to
sell and its value in use, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of
assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses of
continuing operations are recognized in the consolidated statement of comprehensive income as “impairment losses”. In assessing the value in use, the estimated net future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In
determining fair value less costs to sell, recent market transactions are taken into account, if available.
If no such transactions can be identified, an appropriate valuation model is used to determine the fair value of the assets. These calculations are corroborated by valuation
multiples or other available fair value indicators. Impairment losses of continuing operations, are recognized in the consolidated statement of
comprehensive income under expense categories that are consistent with the functions of the impaired assets.
An assessment is made at each annual reporting period as to whether there is any indication that previously recognized impairment losses recognized for an asset may not
longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss for an asset is reversed only if there has
been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset
is increased to its recoverable amount. The reversal is limited so that the carrying amount of the assets does not exceed its recoverable amount nor exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Reversal of an impairment loss is recognized in the consolidated
statement of comprehensive income. After such a reversal, the depreciation charge on the said asset is adjusted in future periods to allocate the asset’s revised carrying amount, less
any residual value, on a systematic basis over its remaining useful life.
v. Deposits and Deposits from Other Banks
Deposits and deposits from other banks are classified as financial liabilities measured at amortized cost using the effective interest method. Incremental costs directly attributable to
the acquisition of deposits and deposits from other banks deducted from the amount of deposits. Refer to Note 2i for the accounting policy for financial liabilities measured at
amortized cost. Deposits are liabilities to customers in the form of demand deposits, savings deposits and
time deposits. Demand deposits represent deposits of customers which may be used as instruments of
payment, and which may be withdrawn at any time by checks, or other orders of payment or transfers.
Savings deposits represent deposits of customers which may only be withdrawn when certain agreed conditions at the account opening are met. They may not be withdrawn by
checks or other equivalent instruments, except by using specific withdrawal slip which can only be validated at the depository bank andor by using Automatic Teller Machine ATM
card.
