Towards Operational Excellence and Financial Sustainability

These consolidated fi nancial statements are originally issued in Indonesian language.
PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2004 and 2003
(Expressed in rupiah, unless otherwise stated)
In compliance with PSAK No. 40, “Accounting for Changes in the Value of Equity of a Subsidiary/ Associated Company”,
the difference between the carrying amount of the Company’s investment in, and the value of the underlying net assets
of, the subsidiary/investee arising from changes in the latter’s equity which are not resulting from transactions between
the Company and the concerned subsidiary/investee, is recorded and presented as “Differences Arising from Changes
in the Equity of Subsidiaries” under the Shareholders’ Equity section of the consolidated balance sheets. Accordingly,
the resulting difference arising from the changes in equity of PT Indomix Perkasa in connection with its application of
the provisions of PSAK No. 50, “Accounting for Investments in Certain Securities”, is recorded and presented under this
account (see item d below).
c. Cash Equivalents
Time deposits and other short-term investments with maturities of three months or less at the time of placement or
purchase and not pledged as collateral for loans and other borrowings are considered as “Cash Equivalents”.
d. Short-term Investments
Investments in equity securities listed on the stock exchanges are classified as “Short-term Investments”.
Equity securities classified as available-for-sale are stated at market values. Any unrealized gains or losses on appreciation/
depreciation in market values of the equity securities are recorded and presented as “Unrealized Losses on Available-for-
Sale Securities - Net” under the Shareholders’ Equity section of the consolidated balance sheets. These are credited or
charged to operations upon realization.
e. Allowance for Doubtful Accounts
Allowance for doubtful accounts is provided based on a review of the status of the individual receivable accounts at the
end of the year.
f. Transactions with Related Parties
The Company and Subsidiaries have transactions with certain parties which have related party relationships as defined
under PSAK No. 7, “Related Party Disclosures”.
All significant transactions and balances with related parties, whether or not conducted using terms and conditions similar
to those granted to third parties, are disclosed in Note 21.
g. Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined using the moving average method.
Allowance for inventory losses is provided to reduce the carrying value of inventories to their net realizable values.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated cost of completion
and estimated cost necessary to make the sale.
h. Prepaid Expenses
Prepaid expenses are amortized over the periods benefited using the straight-line method. The non-current portion of
prepaid expenses is shown as part of “Other Non-current Assets” in the consolidated balance sheets.
60
Indocement Annual Report 2004