PT Summarecon Agung Tbk | Laporan Tahunan 2010 Annual Report

These consolidated financial statements are originally issued in Indonesian language.
PT SUMMARECON AGUNG Tbk AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2010 and 2009
(Expressed in thousands of rupiah, unless otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
b. Principles of consolidation (continued)
The excess of the acquisition cost of the investment over the Company’s interest in the net assets
of Subsidiaries is recorded as ‘‘Excess of Cost Over Interest in Net Assets of Subsidiaries” and is
amortized using the straight-line method over five years. When the cost of the acquisition is less
than the Company’s interest in the net assets of the Subsidiaries, the excess is recognized as
“Excess of Interest in Net Assets of Subsidiary Over Cost” (included as part of Other Payables in
the consolidated balance sheets) and is amortized using the straight-line method over 20 years.
In accordance with PSAK No. 40, “Accounting for Changes in Equity of Subsidiary/Associated
Company”, the differences between the carrying values of the Company’s investments in shares of
stock and its corresponding proportionate equity share in the underlying net asset values of its
Subsidiaries and/or associated companies arising from changes in the latter’s equity, which are not
resulting from transactions between the Company and the subject Subsidiaries/associated
companies, are presented as a separate item under the Shareholders’ Equity section of the
consolidated sheets as “Differences Arising from Changes in Equity of Subsidiary”.
c. Cash equivalents
Time deposits with maturities of three months or less at the time of placement, which are not
restricted as to withdrawal or are not pledged as collateral for loans, are classified as “Cash
Equivalents”. Cash in banks and time deposits which are restricted or pledged are presented as
part of “Other Assets”.
d. Investments
Prior to 2010, investment in shares of stock wherein the Company’s ownership interest is at least
20% but not exceeding 50% is accounted for under the equity method, whereby the cost of the
investment is increased or decreased by the Company’s share in the net earnings or losses of the
associated company and reduced by the dividends received.
In accordance with PSAK No. 15 on “Accounting for Investments in Associated Companies”, under
the equity method, if an investor’s share in the losses of an investee equals or exceeds the
carrying amount of the investment, the investment shall be reported at zero value. Subsequent
losses will be absorbed with a credit to liability only if the investor has guaranteed to pay the
investee’s liabilities. If the investee subsequently reports a profit, the investor will recognize income
only after its share in the profit exceeds its share in the net losses not recognized or absorbed.
Starting 2010, investment on share of stock wherein the Company’s ownership interest is less than
20% is clasified of financial asset available for sale is determined based on the policies outlined in
Note 2v.
e. Allowance for impairment
Prior to 2010, allowance for impairment was provided based on a review of the status of the
individual receivables at the end of the year. Starting 2010, the allowance, if any, is determined
based on the policies outlined in Note 2v.
f. Transactions with related parties
The Company and Subsidiaries have transactions with certain parties which are regarded as
having related party relationships as described by PSAK No. 7 on “Related Party Disclosures”.
Significant transactions with related parties are disclosed in Note 32.
12