Adaro Energy Annual Report 2008 www.adaro.com
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PT ADARO ENERGY Tbk Schedule 57
FORMERLY PT PADANG KARUNIA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2008 AND 2007 Expressed in million Rupiah, unless otherwise stated
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
f. Investments in debt and equity securities continued
Investments with a fixed maturity that management has the intent and ability to hold to maturity are classified as held-to- maturity and are included in non-current assets, except for maturities within 12 months from the balance sheet date which are
classified as current assets. Held-to-maturity investments are carried at amortised cost using the effective yield method. Investments not classified as either held-to-maturity or trading securities are classified as available-for-sale, and are included
in non-current assets unless management has expressed an intention to hold the investment for less than 12 months from the balance sheet date or unless they need to be sold to raise operating capital, in which case they are included in current assets.
Realised and unrealised gains and losses arising from changes in the fair value of trading investments are recognised in the consolidated statement of income in the period in which they arise. Unrealised gains and losses arising from changes in the
fair value of securities classified as available-for-sale are recognised in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in
the consolidated statement of income as gains and losses from investment securities. The costs of securities sold are determined on the basis of the weighted average method.
g. Impairment of investment in equity and debt securities
At the balance sheet date, the Group undertakes a review to determine whether there is any indication of impairment of investments in equity and debt securities. Provision is only made when there has been a significant reduction or a permanent
decline in the value of the investment.
h. Fixed assets and depreciation
Fixed assets, except land, are stated at cost of acquisition less accumulated depreciation. Fixed assets, except the land and fixed assets of Adaro, are depreciated to their estimated residual value using the straight-
line method over their expected useful lives as follows:
Years
Buildings 20
Infrastructure 20 - 30
Operational equipment 8 - 10
Project equipment 4
Mining equipment 4
Vehicles 4
Office equipment 4 - 5
The fixed assets of Adaro are depreciated using the straight-line method to their estimated residual value, over the lesser of the estimated useful lives of the assets, the life of the mine or the term of the CCA, stated as follows:
Years
Buildings 10 - 21
Machinery, operational equipment and vehicles 3 - 20
Office equipment 10
Crushing and handling facilities 10 - 30
Roads and bridges 17 - 30
Stockpile facilities 17 - 20
Dock facilities 20
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the consolidated statement of income during the financial period in which they are incurred.
For assets which are no longer utilised or sold or surrendered to the Government, the carrying amount and its 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 statement of income. The accumulated costs of the construction of buildings and plant 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 completed. Depreciation is charged from that date.
