PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 1, 2010, DECEMBER 31, 2010 AND 2011 AND
YEARS ENDED DECEMBER 31, 2010 AND 2011
(Figures in tables are presented in billions of Rupiah, unless otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
l. Property, plant and equipment - direct acquisitions
The Company and its subsidiaries periodically evaluate its property, plant and equipment for
impairment, whenever events and circumstances indicate that the carrying amount of the assets
may not be recoverable. When the carrying amount of an asset exceeds its estimated
recoverable amount, the asset is written-down to its estimated recoverable amount, which is
determined based upon the greater of its fair value less cost to sell or value in use.
Spare parts and servicing equipment are carried as inventory and recognized in profit or loss as
consumed. Major spare parts and stand-by equipment that are expected to be used for more
than 12 months are recorded as part of property, plant and equipment.
When assets are retired or otherwise disposed of, their cost and the related accumulated
depreciation are eliminated from the consolidated statement of financial position, and the
resulting gains or losses on the disposal or sale of property, plant and equipment are recognized
in the consolidated statement of comprehensive income.
Certain computer hardware can not be used without the availability of certain computer software.
In such circumstance, the computer software is recorded as part of the computer hardware. If any
computer software is independent from its computer hardware, it is recorded as part of intangible
The cost of maintenance and repairs is charged to the consolidated statement of comprehensive
income as incurred. Significant renewals and betterments are capitalized.
Property under construction is stated at cost until construction is completed, at which time it is
reclassified to the specific property, plant and equipment account to which it relates. During the
construction period until the property is ready for its intended use or sale, borrowing costs, which
include interest expense and foreign currency exchange differences incurred to finance the
construction of the asset, are capitalized in proportion to the average amount of accumulated
expenditures during the period. Capitalization of borrowing cost ceases when the construction
has been completed and the asset is ready for its intended use.
Equipment temporarily unused is reclassified into equipment not used in operation and
depreciated over their estimated useful life using straight-line method.
A lease is classified as a finance lease or operating lease based on the substance not the form of
the contract. Property, plant and equipment under finance lease is recognized if the lease
transfers substantially all the risks and rewards incidental to ownership.
Finance leases are recognized as assets and liabilities in the statement of financial position as
the amounts equal to the fair value of the leased assets or, if lower, the present value of the
minimum lease payments. Any initial direct costs of the Company and its subsidiaries are added
to the amount recognized as an asset.
Minimum lease payments shall be apportioned between the finance charge and the reduction of
the outstanding liability. The finance charge shall be allocated to each period during the lease
term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Contingent rents shall be charged as expenses in the periods in which they are incurred.
Leased assets are depreciated using the same method with and based on the useful lives as
estimated for directly acquired property, plant and equipment. However, if there is no reasonable
certainty that the Company and its subsidiaries will obtain ownership by the end of the lease
term, the leased assets are fully depreciated over the shorter of the lease term and their
economic useful lives.