Schedule 513 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 c. Foreign currency translation
Transactions denominated in currencies other than Rupiah are converted into Rupiah at the exchange rate prevailing at the date of the transaction. At the balance sheets date, monetary assets and liabilities in
currencies other than Rupiah are translated into Rupiah at the exchange rate prevailing at that date. Exchange gains and losses arising on the translation of monetary assets and liabilities in currencies other than Rupiah are
recognised in the consolidated statements of income.
The rates of exchange, based on the Bank Indonesia middle rate, used at the balance sheet dates were as follows full amount:
31 March 31 December
2008 2007
2007 2006
2005 Unaudited
Restated Restated
United States Dollar “US” equivalent to Rp . . . . . . . . . . . . . 9,217
9,118 9,419
9,020 9,830
Euro “EUR” equivalent to Rp . . . . . . . . . . . . . . . . . . . . . . . . . 14,559
12,154 13,760
11,858 11,660
Australian Dollar “AUD” equivalent to Rp . . . . . . . . . . . . . . . 8,450
7,364 8,229
7,133 7,207
100 Japanese Yen “JPY” equivalent to Rp . . . . . . . . . . . . . . . 9,227
7,758 8,307
7,580 8,342
Singapore Dollar “SGD” equivalent to Rp . . . . . . . . . . . . . . . 6,683
6,011 6,502
5,879 5,907
Great Britain Pound Sterling “£” equivalent to Rp . . . . . . . . . 18,391
17,894 18,804
17,697 16,947
Malaysian Ringgit “MYR” equivalent to Rp . . . . . . . . . . . . . 2,893
2,638 2,828
2,554 2,601
d. Transactions with related parties
The Group has entered into transactions with certain related parties as defined under the Statement of Financial Accounting Standards “SFAS” No. 7, “Related Party Disclosures”.
e. Receivables
Receivables are presented at their estimated recoverable value after providing allowance for doubtful accounts based on management’s review of the status of each account at the end of the financial periodyear.
Receivables are written-off during the period in which they are determined to be not collectible.
f. Inventories
Coal inventories represent the Group’s entitlement to coal on hand and are valued at the lower of cost or net realisable value. Cost is determined by moving average basis which includes an appropriate allocation of
materials, labour, depreciation and overheads related to mining activities. Net realisable value is the estimated sales amount in the ordinary course of business, less the estimated costs of completion and estimated selling
expenses.
Spare parts and materials are valued at cost, determined on a moving average basis, less allowance for obsolete inventory. Spare parts and materials are charged to production costs in the period they are used.
Allowance for obsolete inventory is determined on the basis of estimated future usage or sale of individual inventory items.
g. Prepaid expenses
Prepaid expenses are amortised over the periods benefited using the straight-line method. F-30
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
