PT. TUNAS BARU LAMPUNG Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31,2007 AND 2006 AND FOR THE THREE MONTHS PERIOD THEN ENDED Continued
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e. Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in Indonesia requires management to make estimates and assumption
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
f. Cash and Cash Equivalents
Cash consists of cash on hand and cash in banks. Cash equivalents consist of time deposit on call and Negotiable Certificates of Deposits
NCD. These cash equivalents are short-term, highly liquid investment that are readily convertible to known amounts of cash with original matures of three months or less from the
date of placements, and which are not used as collateral and are not restricted. NCD’S with maturity less than three months are stated at its nominal amount net of
unamortized interest received in advance. Such interest received in advance will be amortized over the period of the NCD’s.
g. Short – Term Investments
Short – term investments consist of investments in NCD with maturity of more than three months from the date of placement.
NCD’s with maturity of more than three months are stated at its nominal amount , net of unamortized interest received in advance. Such interest received in advance will be
amortized over the period of the NCD’s.
h. Account Receivable
Accounts receivable are stated at net realized value, after providing an allowance for doubtful accounts. Accounts receivable deemed uncollectible are written off.
An allowance for doubtful account is provided based on management’s evaluation of the collectibility of the individual receivable accounts at the end of the year.
i. Inventories
Inventories are stated at cost and net realized value, whichever is lower. Cost is determined using the moving average method. Allowances for inventory obsolescence and decline in
value of the inventories are provided to reduce the carrying value of inventories to their net realized value.
A provision for inventory obsolescence is recognized based on management’s review of the condition of each inventories category at the end of the year.
A provision for decline in value of inventories is provided based on management’s evaluation of the estimated market value of the inventories at the end of the year, based on assumptions
about future demand and market conditions.
j. Prepaid Expenses
