Discontinuing Operation Basic Earnings Per Share

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

o. Taxation

Under PSAK No.46, current tax expenses will be determined based on profit subject to tax for the current period and calculated using the currently applying tax rates. Deferred tax assets and liabilities are recognized for temporary differences between the financial and the tax bases of assets and liabilities at each reporting date. Future tax benefits, such as the carry-forward of unused tax losses, are also recognized to the extent that realization of such benefits is probable. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the statements of financial position date. Amendments to tax obligations are recorded when an assessments is received or, if appealed against by the Entity, when the result of the appeal is determined. Indonesian tax regulations do not apply a concept of consolidated tax returns. Therefore, the tax balances in the consolidated financial statements represent the combination of the Entity’s and its Subsidiaries tax position.

p. Employee Benefit Liabilities

The Entity recognizes an unfunded employee benefit liability in accordance with Labor Law No. 132003 dated March 25, 2003 “the Law”. Before January 1, 2005, the Entity recognized employee benefits obligations based on the actuary assessment under PSAK No.24 Cost Benefit Pension Accounting published in 1994. Under PSAK No. 24 Revised 2004, Employee Benefit, the cost of providing employee benefit under the Law is determined using the projected unit credit actuarial valuation method based on projected unit credit. Actuarial gains and losses are recognized as income or expense when the net cumulative unrecognized actuarial gains and losses for each individual plan at the end of the previous reporting year exceeded 10 of the defined benefit obligation and 10 of the fair value of plan assets. These gains or losses are recognized on a straight-line method of the expected average remaining working lives of the employees. Further, past-service costs arising from the introduction of a defined benefit plan or changes in the benefit payable of an existing plan are required to be amortized over the period until the benefits concerned become vested.

q. Discontinuing Operation

The discontinuing of operation for an unknown period of time and unknown management plan for the future to continue its operation in textile industry since its inability to compete in international or local market, the increase of transportation costs, increase of world oil prices and raw material cotton, where the Entitys division activities can be separated operationally and the purpose of financial statement reporting in the Entity and its Subsidiaries as a whole, have to be calculated in accordance with PSAK No.58 Revised 2009 on Non-Current Assets, Held for Sale and Discontinued Operations. PSAK No.58 Revised 2009 obligate the financial statements prepared in the period where required the financial statements prepared in the period in which there are plans to discontinue actions preliminary disclosure must be included in the information related to discontinued operation. In order to disclose asset valuation, liabilities, income, expenses, gains, losses and cash flows of discontinued operation in accordance with PSAK revealed that those elements of financial statement can be directly attributed to the discontinued operation, if those elements will be sold, left out, expended or eliminated by the time the discontinuing process of operation has finished. In reverse, foresaid elements considered being used continually after the discontinuing process cannot be included in the discontinued operation classification. Comparative information on the prior year should be presented to distinguish between continued and discontinued operation.

r. Basic Earnings Per Share

In accordance with PSAK No. 56, Earning Per Share, net income loss from normal operations per share and net income loss per share are computed by dividing the respective income loss with the weighted average number of shares outstanding during the year. Earnings per share calculations are based on 118,267,864 shares and 98,236,000 shares for the year ended December 31, 2011 and December 31, 2010. 02

s. Segment Information