Transactions with Related Parties

PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2012 and 2011 and January 1, 2011December 31, 2010 and For the Years then Ended December 31, 2012 and 2011 Figures are Presented in Millions of Rupiah, unless Otherwise Stated - 30 - 2. Loans and Receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are not entered into with the intention of immediate or short-term resale and are not classified as financial assets at FVPL, HTM investments or AFS financial assets. After initial measurement, loans and receivables are subsequently measured at amortized cost using the effective interest method, less allowance for impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the effective interest rate. The amortization is included as part of interest income in the consolidated statement of comprehensive income. The losses arising from impairment are recognized in the consolidated statement of comprehensive income. As of December 31, 2012 and 2011 and January 1, 2011December 31, 2010, this category includes cash and cash equivalents, short-term investments time deposits, placement with other banks, and securities - export bill receivables, securities purchased under agreements to resell, consumer finance receivables, net investments in finance lease, factoring receivables, loans, securities agent receivables, other accounts receivable, and other assets security deposits and money transfers. 3. HTM Investments HTM investments are non-derivative financial assets with fixed or determinable payments and fixed maturities for which the Group’s management has the positive intention and ability to hold to maturity. When the Group sells or reclassifies other than an insignificant amount of HTM investments before maturity, the entire category would be tainted and reclassified as AFS financial assets. After initial measurement, these investments are subsequently measured at amortized cost using the effective interest method, less impairment in value. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part of the effective interest rate. The amortization is included as part of interest income in the consolidated statement of comprehensive income. Gains and losses are recognized in the consolidated statement of comprehensive income when the HTM investments are derecognized and impaired, as well as through the amortization process using effective interest method. As of December 31, 2011 and January 1, 2011December 31, 2010, this category includes short-term investments – securities Certificate of Bank Indonesia, Credit Linked Note, Republic of Indonesia – ROI Loans, bonds, export bill receivables, and placement with Bank Indonesia. 4. AFS Financial Assets AFS financial assets are those which are designated as such or not classified in any of the other categories. They are purchased and held indefinitely and may be sold in response to liquidity requirements or changes in market conditions. PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2012 and 2011 and January 1, 2011December 31, 2010 and For the Years then Ended December 31, 2012 and 2011 Figures are Presented in Millions of Rupiah, unless Otherwise Stated - 31 - After initial measurement, AFS financial assets are measured at fair value with unrealized gains or losses recognized as other comprehensive income, until the investment is sold, or determined to be impaired, at which time the cumulative gain or loss is reclassified to the profit and loss and removed from comprehensive income. As of December 31, 2012 and 2011 and January 1, 2011December 31, 2010, this category includes short-term invesments – securities bonds, Republic of Indonesia – ROI Loans, shares that are traded in Indonesia Stock Exchange, and certain investments in shares In the absence of a reliable basis for determining the fair value, the Group’s investments in shares of stock enumerated in Note 17 are carried at cost, net of any impairment. Financial Liabilities 1. Financial Liabilities at FVPL Financial liabilities are classified in this category if these result from trading activities or derivative transactions that are not accounted for as accounting hedges, or when the Group elects to designate a financial liability under this category. Changes in fair value are recognized directly in the consolidated statement of comprehensive income. As of December 31, 2012 and 2011 and January 1, 2011December 31, 2010, this category includes segregated liabilities for unit-linked policies January 1, 2011December 31, 2010: include derivative liabilities. 2. Other Financial Liabilities This category pertains to financial liabilities that are not held for trading or not designated at FVPL upon the inception of the liability. Issued financial instruments or their components, which are not classified as financial liabilities at FVPL are classified as other financial liabilities, where the substance of the contractual arrangement results in the Group having an obligation either to deliver cash or another financial asset to the holder, or to satisfy the obligation other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of own equity shares. Other financial liabilities are recognized initially at fair value and are subsequently carried at amortized cost, taking into account the impact of applying the effective interest method of amortization or accretion for any related premium, discount, and any directly attributable transaction costs. As of December 31, 2012 and 2011, this category includes deposits and deposits from other banks, securities sold under agreement to repurchase, securities agent payables, accrued expenses, medium term notes, loans received, and other liabilities.