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)
v. Financial instruments (continued)
vi. Impairment of financial assets (continued)
● Loans and receivables (continued)
The carrying amount of the financial asset is reduced through the use of an allowance for
impairment account and the amount of the loss is recognized in the consolidated
statements of income. Interest income continues to be accrued on the reduced carrying
amount based on the original effective interest rate of the financial asset. Loans and
receivables, together with the associated allowance, are written off when there is no
realistic prospect of future recovery and all collateral has been realized or has been
transferred to the Company and Subsidiaries. If, in a subsequent year, the amount of the
estimated impairment loss increases or decreases because of an event occurring after the
impairment was recognized, the previously recognized impairment loss is increased or
reduced by adjusting the allowance for impairment account. If a future write-off is later
recovered, the recovery is recognized in profit or loss.
● Available-For-Sale (AFS) financial assets
In the case of equity investments classified as an AFS financial asset, objective evidence
would include a significant or prolonged decline in the fair value of the investment below its
cost.
Where there is evidence of impairment, the cumulative loss - measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that
investment previously recognized in profit or loss - is reclassified from stockholders’ equity
to profit or loss. Impairment losses on equity investments are not reversed through the
profit or loss; increases in their fair value after impairment are recognized in stockholders’
equity.
In the case of debt instruments classified as an AFS financial asset, impairment is
assessed based on the same criteria as financial assets carried at amortized cost. Future
interest income is based on the reduced carrying amount and is accrued based on the rate
of interest used to discount future cash flows for the purpose of measuring impairment
loss. Such accrual is recorded as part of the “Interest income” account in the consolidated
statement of income. If, in a subsequent period, the fair value of a debt instrument
increases and the increase can be objectively related to an event occurring after the
impairment loss was recognized in profit or loss, the impairment loss is reversed through
profit or loss.
vii. Derecognition of financial assets and liabilities
Financial Assets
A financial asset (or where applicable, a part of a financial asset or part of a group of similar
financial assets) is derecognized when: (1) the rights to receive cash flows from the asset
have expired, or (2) the Company and Subsidiaries have transferred their rights to receive
cash flows from the asset or have assumed an obligation to pay the received cash flows in full
without material delay to a third party under a “pass-through” arrangement; and either (a) the
Company and Subsidiaries have transferred substantially all the risks and rewards of the
asset, or (b) the Company and Subsidiaries have neither transferred nor retained substantially
all the risks and rewards of the asset, but have transferred control of the asset.
22