Transactions with related parties

Schedule 514 PT BAYAN RESOURCES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2008 AND 2007 AND 31 DECEMBER 2007, 2006 AND 2005 Expressed in million Indonesian Rupiah, unless otherwise stated

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued h. Fixed assets

Fixed assets are stated at cost of acquisition, less accumulated depreciation. Fixed assets, except land, are depreciated from the month the assets are placed in to service using the straight-line method to their estimated residual value over the lesser of the estimated useful lives of the assets, the life of mine or the CCoW or Mining Rights terms as follows: Years 2008 and 2007 2006 and 2005 Buildings and port facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-20 4-20 Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-10 4-8 Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4 Office furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4 Other equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4 Repairs and maintenance are charged to expense in the period incurred. Expenditures which extend the useful life of assets are capitalised and depreciated over the remaining useful life of the related assets. When assets are retired or otherwise disposed of, their carrying values and the related accumulated depreciation are eliminated from the consolidated financial statements, and the resulting gains and losses on the disposal of fixed assets are recognised in the consolidated statements of income. The accumulated costs of the construction of buildings and port facilities and the installation of machinery are capitalised as construction in progress. These costs are reclassified to fixed asset accounts when the construction or installation is complete. The point in time when depreciation commences and is charged to expense can be determined as follows: ‰ for fixed assets directly used in the production process, depreciation is calculated when commercial production commences and the depreciation cost is expensed as production costs. ‰ for fixed assets not directly used in the production process, depreciation commences when the construction of the fixed assets is completed and the depreciation cost is expensed as part of operating expense in the current period. Interest and other borrowing costs, such as discount fees on loans either directly or indirectly used in financing construction of a qualifying asset, are capitalised up to the date when construction is complete. For borrowings directly attributable to a qualifying asset, the amount to be capitalised is determined as the actual borrowing costs incurred during the periodyear, less any income earned on the temporary investment of such borrowings. For borrowings that are not directly attributable to a qualifying asset, the amount to be capitalised is determined by applying a capitalisation rate to the amount expended on the qualifying asset. The capitalisation rate is the weighted-average of the borrowing costs applicable to the total borrowings outstanding during the period, excluding borrowings directly attributable to financing the qualifying asset under construction.

i. Fixed assets under finance leases

Fixed assets acquired by means of finance leases are presented at the present value of the minimum lease payments plus purchase option that will be paid by the Group at the end of the lease period. A corresponding liability is also established and each lease payment is allocated between the liability and finance charges. The assets are depreciated similarly to owned assets. F-31