Foreign Currency Transactions and Balances

PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2008 and 2007 Expressed in millions of Rupiah, unless otherwise stated 22

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued g. Securities continued

Securities are stated net of allowance for possible losses and unamortized premiums or discount. Premiums and discounts are amortized using the straight-line method. Securities are derecognized from the consolidated balance sheet after the Bank has transferred all significant risk and rewards of the related securities.

h. Government Bonds

Government Bonds represent bonds issued by the Government of the Republic of Indonesia. Government Bonds are stated based on the classification of the bonds, which accounting treatment is similar to those of securities as described in Note 2g above. For Government Bonds, which are traded in organized financial markets, fair value is generally determined by reference to quoted market bid prices by Bloomberg’s and quoted price by broker on the balance sheet date. For Government Bonds where there are no quoted market prices, a reasonable estimate of the fair value is calculated using the yield-to-maturity approach. Government Bonds was derecognized from the consolidated balance sheet after the Bank has transferred all significant risk and rewards of the related Government Bonds.

i. Other Receivables - Trade Transactions

Other receivables - trade transactions represent receivables resulting from contracts for trade-related facilities given to customers, which are collectible when due, presented at their outstanding balances, net of allowance for possible losses.

j. Securities PurchasedSold under ResellRepurchase Agreements

Securities purchased under resell agreements are presented as assets in the consolidated balance sheet at their resale price less unamortized interest and allowance for possible losses. The difference between the purchase price and the selling price is treated as unrealized unamortized interest income and is recognized as income during the period from the purchase of securities to the date of resell. Securities sold under repurchase agreements are presented as liabilities in the consolidated balance sheet at the repurchase price less unamortized interest. The difference between the selling price and the repurchase price is treated as a prepaid expense and is recognized as expense during the period from the sale of securities to the date of repurchase.