PSAK 55 : FINANCIAL INSTRUMENTS, RECOGNITION, & MEASUREMENT

CHAPTER 1BACKGROUND ISSUES

Financial instrument is any contract that adds to the value of the entity's financial assets and financial liabilities or equity instrument of another entity. Today the financial instrument has been growing by leaps and bounds, not only used by financial institutions Bank, but also by non-bank financial institutions. Therefore, in order to harmonize accounting standards specifically for the Indonesian banking sector and in line with efforts to improve market discipline, Bank Indonesia initiated a partnership with the Indonesian Institute of Accountants (IAI) to develop accounting standards adopted IAS 39 and IAS 32 on financial instruments. The results of the adoption of IAS 32 are PSAK 50 and PSAK 60 which governs the presentation and disclosures of financial instruments. While the results of the adoption of IAS 39 are PSAK 55 which governs the recognition and measurement of financial instruments. This paper focuses on the recognition and measurement of financial instruments based on PSAK 55 and their implementation and application in the business world.

CHAPTER 2EXPLANATION OF PSAK 55

Derivative is a financial instrument or other contract that included in the scope of this Statement (see paragraphs 2-7) with the following of three characteristics The value is changed as a result of changes in the variables that have been determined (often referred to as underlying, such as: the interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or index of interest rates, credit rating or credit index, or variable other that have been determined. For non-financial variable, the variable is not related to the parties in the contract does not require initial net investment or net require an initial investment in a smaller amount compared to the amount needed to other similar contracts that are expected to generate similar effects as a result of changes in market factors, and completed on a specific date in the futureFinancial assets or financial liabilities at fair value through profit or loss are financial assets or financial liabilities that meet one of the following conditions: Classified as group for trading, if : Acquired or owned to the purpose of selling or repurchasing in the near term. A part of certain financial instruments portfolio that are managed together and there is evidence of a transaction profit taking in the short term to date. A derivative (except for a derivative which is financial guarantee contract or as a hedging instrument that has determined and effective).

At the time of initial recognition has been established by the entity to be measured at fair value through profit or loss. An entity may use this designation only if it fulfills paragraph 11, or when to do so will generate more relevant information because : Eliminate or significantly reduce the measurement inconsistency that can arise from measuring assets or liabilities or recognition of gains and losses because the use of different basics; or Group of financial assets, financial liabilities or both is managed and its performance is evaluated based on the fair value.

Investments held to maturity are non-derivative financial assets with fixed or determinable payments and maturities have been established, and the entity has the positive intention and ability to hold the asset until maturity, except:a. Investment before initial recognition designates as financial assets measured at fair value through profit or loss.b. Investments that fulfill the definition of loans and receivables.

An entity should not classify financial assets as until held to maturity, if in the current year or within the previous two years, sold or reclassified held to maturity investments in significant amounts before the maturity (quite significant compared to the total value of investments held to maturity), unless the sale or reclassifications are: Performed when the financial asset is approaching maturity or date of redemption. occur after the entity succeed to collect almost all of the principal amount of the financial asset according to the payment schedule or the initial payment; or Related to certain events that are beyond the control of the entity, not repetitive, and cannot be reasonably anticipated by the entity.

Loans and receivables are non-derivative financial assets with fixed payments or has determinable and have no quotations in an active market, except:a. loans and receivables which are intended by the entity for sale in the near term, which are classified as held for trading, which prior to initial recognition, by the entity established as financial assets measured at fair value through profit or loss;b. loans and receivables prior initial recognition designates as available for sale, orc. loans and receivables in case the owner may not recover its initial investment, unless caused by a substantial decrease in the quality of loans and receivables, and classified as available for sale.

Ownership of the assets that are not loans or receivables (such as ownership of the mutual fund or something) cannot be classified as a loan or bill.

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified as;

(a) A loan or receivable,

(b) held-to-maturity investments, or

(c) Financial assets measured at fair value through profit or loss

Amortized cost of a financial asset or financial liability is the amount of the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortization using the effective interest method, calculated from the difference between the initial value and maturity value, and less reduction for impairment or a value that cannot be billed.

The effective interest method is a method used for calculating the amortized cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period.

Derecognition of financial assets are expenditures or financial liability previously recognized from the statement of financial position entities.

Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Transaction costs are additional costs that directly attributable to the acquisition, issuance or disposal of financial assets or financial liability. Additional costs are costs that would not happen if the entity does not acquire, issued or dispose of financial instruments.

Definite commitment is a binding agreement for the exchange of resources in a certain quantity at a certain price and the date or dates specified in the future.

Approximate transaction is a transaction in the future that has not binding yet but has in anticipated.

A hedging instrument is a designated financial instrument whose fair value or related cash flows should offset changes in the fair value or cash flows of a designated hedged item. A hedged item is an asset, liability, commitment, highly probable transaction, or investment in a foreign operation that exposes an entity to changes in fair value or cash flows, and is designated as being hedged.

Hedging effectiveness is the extent to which changes in fair value or cash flows of the hedged item attributable to the hedged risk will be offset by changes in fair value or cash flows of the hedging instrument.

Embedded derivativeAn embedded derivative is part of a financial instrument that also includes a nonderivative host contract. The embedded derivative requires that some portion of the contract's cash flows be modified in relation to changes in a variable, such as an interest rate, commodity price, credit rating, or foreign exchange rate.Embedded derivatives must be separated from the host contract and recorded as derivatives based on this statement, if: Economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the main contract. A separate instrument with the same requirements by embedded derivative meets the definition of a derivative, and Combined instrument is not measured at fair value where the changes in fair value is recognized through profit or loss.If a contract has one or more embedded derivatives, an entity can set the overall contract combined (hybrid) as financial assets or financial liabilities at fair value through profit or loss, except:a. embedded derivative does not significantly modify the cash flows that required by the contract, orb. Without analysis when a similar hybrid instrument was first considered that separation of the embedded derivative are not allowed.c. such early redemption option embedded in a loan that allows the holder to pay off earlier loans approximately at amortized cost

Instrument Qualification Which Meets HedgingNon-derivative financial assets or non-derivative financial liabilities can be established as hedging instruments only to hedge the risk of changes in exchange rates. For hedge accounting purposes, only instruments that involve external parties of the reporting entity (i.e. external to the group, segment, or the reporting entity) that can be established as hedging instruments.

Determination of Hedging InstrumentsHedging relationships fixed by entity as hedging instruments overall value. Exceptions are allowed only:a. The separation of intrinsic value and time value of the option contract, and its adoption as a hedging instrument only for changes the intrinsic value in the options and do not include changes in the value of time.b. separation of the elements of interest and the current price (spot price) of futures contracts (forward contracts)

The exceptions are permitted because the intrinsic value of an option and the premium of a futures contract can generally be measured separately. Dynamic hedging strategy that assesses the intrinsic value and time value of option contracts qualify for hedge accounting.

A hedging instrument can be determined as a hedge for more than one type of risk, throughout:a. the risks hedged can be identified clearly;b. the effectiveness of the hedge can be proved, andc. Possible to ensure that there is a specific determination of the hedging instrument and different risk positions.

Hedged itemItems that can be hedged asset or liability is recognized, unrecognized definite commitment, most likely forecast transaction occurs (highly probable), or a net investment in a foreign operation. Items that can be hedged:a. Asset, liability, definite commitment, estimated transactions most likely occur, or a net investment in a foreign operationb. A group of assets, liabilities, definite commitment, forecast transactions most likely to occur, or the net investment in foreign operations, which has the same risk characteristics, orc. In the case of a portfolio hedge of interest rate risk, part of a portfolio of financial assets or financial liabilities that share the risk hedged. Investments held to maturity are not hedged item.For hedge accounting purposes, only assets, liabilities, definite commitment or forecast transaction that most likely to occur (highly probable) that involve external parties of the reporting entity can be designated as hedged items.

Determination of group items as hedged itemsIf the hedged item is a financial asset or financial liability, the asset or liability can be hedged item for the risk associated with only a portion of the cash flow or fair value (such as one or more current selected contractual cash flows or portions of cash or a certain percentage of the fair value) along the hedge effectiveness can be measured

Determination of Non-Financial Items as hedged items

If the hedged item is a non-financial asset or non-financial liability, then the item is determined as hedged item;a. The risk of changes in exchange rates, orb. For the overall of its value against all risks, because of the trouble to separate and measure the exact portion of changes in cash flows or fair values due to specific risks other than the risks of exchange rate changes

Determination of group items as hedged itemsSimilar assets or liabilities are summed and hedged as a group only if the individual assets or liabilities in the group had the same risk exposures that are determined as hedged risks. Furthermore, the change in fair value attributable to the hedged risk for each individual item in the group item is expected to be proportional to the entire change in fair value attributable to the hedged risk of the group item

Recognition According PSAK 55Entity recognizes financial asset or financial liabilities on financial statements only then that entity is a part of that financial instruments contract. To recognize financial instrument, entity must classify those assets/liabilities into two parts: to recon it at fair value or to recon it at fair value plus transaction cost. Fair value itself is a value of which one asset can be traded or when one liability can be settled between participated parties. It is not a value that is forced upon asset or liabilities due to forced liquidation or forced sales because of financial difficulties.

DE recognition of financial assetsEntities derecognize financial assets, if and only if: (a) the rights to receive cash flows from the financial assets have expired, or (b) an entity transfers financial assets as described in paragraphs 18 and 19, and the transfer meets the DE recognition criteria at paragraph 20

Entities transferring financial assets, if and only if, the entity:

(a) Transfers the contractual rights to receive cash flows from the asset, or

(b) Retains the contractual rights to receive cash flows from the asset. But also bear the contractual obligation to pay the received cash flows to one or more recipients through an agreement that meets the requirements of paragraph 19.

When an entity retains the contractual rights to receive cash flows from the asset (asset early), but also bear the contractual obligation to pay the received cash flows to one or more entities (receiving end), it shall treat the transaction as a transfer of assets finance, if and only if, all the following conditions are met:a. The Company is not obligated to pay the ultimate consignee, unless the entity to obtain an equivalent amount of assets initially. Short-term cash advance given entity with rights to recover the loaned amount in full plus interest payable is calculated based on market interest rates do not violate this requirement.b. The entity is not allowed under the terms of the transfer contract from selling or mortgaging assets initially except to ensure the right end of the receiver to receive cash flows.c. The Company is obliged to hand over any cash flow is taken for and on behalf of the receiver end without significant delay. In addition, the entity is not entitled to reinvest such cash flows, except for investments in cash or cash equivalents during the short settlement period, i.e. between the statement date and the payment date to the final recipient, and interest income earned from investments shall be delivered to the final recipient.

When an entity transfers financial assets, it shall evaluate the extent to which an entity retains the risks and rewards of the asset. In this case: a. If the entity transferred substantially all the risks and rewards of the asset, it shall suspend the recognition of a financial asset and recognize separately as assets or liabilities to any rights and obligations that arise or are still held in the transfer.b. If the entity has substantially all the risks and rewards of ownership of the financial asset, it shall continue to recognize the financial asset.c. If the entity does not transfer substantially all the risks and rewards of ownership and financial assets, it shall determine whether the entity still has control over the asset. In this case:

i. If the entity no longer has control, it shall suspend the recognition of the financial asset and recognize separately as asset or obligation to any rights and obligations that arise or are still held in the transfer.ii. If the entity still has control, it shall continue to recognize the financial asset for the sustainability of involvement in the asset.

TRANSFER OVERALL

If the transferred asset continues to be recognized, the related assets and liabilities should not be offset. Likewise, each entity should not eliminate any income derived from assets transferred to any expenses arising from the liabilities associated. If the parties provide collateral instead of cash transfers (such as debt instruments or equity instruments) on the transfer recipient, the accounting for the transfer and the recipient of a transfer of collateral depends on whether the transfer recipient has the right to sell or pledge the collateral back, and whether the defaulting party has been transferred. Both sides noted the collateral as follows:A. If the receiving party or convention transfer the contract has the right to sell or pledge the collateral back, the party transferring the assets reclassified in the balance sheet separately from other assets (such as a loaned asset, pledged equity instruments or repurchase receivable).B. If the transfer recipient sells collateral pledged to it, then the transfer recipient acknowledge the sale and a liability measured at fair value on its obligation to return the collateral.C. If the defaulting party to transfer under the provisions of the contract and is no longer entitled to withdraw collateral, then the collateral derecognize the transfer, and the transfer recipient recognize the collateral as its assets are measured at initial recognition at fair value, or if the party receiving the transfer is sell the collateral, then the recipient must transfer derecognized its obligation to return the collateral.D. Except as set forth in subparagraph (c), which transfers the collateral is still recorded as assets and the transfer recipient is not permitted to recognize as asset collateral

Purchase or Sale of a Financial Asset usual (regular)

Purchases or sales of financial assets are prevalent (regular) are recognized and derecognized using one between trade date accounting or settlement date accounting

DE recognition Financial LiabilitiesThe entity issuing the financial liability (or part of a financial liability) from its balance sheet, if and only if, the financial liability does not exist anymore, i.e. when the obligation specified in the contract is terminated or canceled or expires.Exchange between borrowers and lenders that currently exist on the debt instrument with substantially different terms are recorded as losses (extinguishment) original liability and the recognition of a new liabilitySimilarly, a substantial modification of the terms of financial obligations that currently exist or are part of a financial liability (whether or not its relation to financial difficulties debtor) recorded as the elimination of the original liability and the recognition of a new liability. The difference betweena. the carrying amount of the financial liability (or part of a financial liability) is abolished or transferred to another party, tob. the amount paid, including non-cash assets transferred or liabilities assumed, is recognized in profit or loss

MeasurementInitial Measurement (Initial Measurement)At the time of initial recognition of the financial asset or financial liability, the entity to measure at fair value.In the case of financial assets or financial liabilities not measured at fair value through profit or loss, fair value plus transaction costs that are directly attributable to the acquisition or issuance of financial assets or financial liabilities.Measurement of Financial Assets after Initial Recognition (Subsequent Measurement)For the purpose of measuring financial assets after initial recognition, financial assets classified SFAS 55 in four categories:a. Financial assets designated as at fair value through profit or loss;b. Investments held to maturity;c. Loans or receivables, andd. Financial assets available for sale.After initial recognition, an entity to measure financial assets, including derivatives that are recognized as assets, at fair value, without deducting transaction costs that may be incurred on sale or other disposal, except for the following financial assets:a. Loans and receivables as defined in paragraph 07 of SFAS 55, which is measured at amortized cost using the effective interest method;b. Investments held to maturity as defined in paragraph 08 of SFAS 55, which are measured at amortized cost using the effective interest method, andc. Investments in equity instruments that do not have a price quotation in an active market and their fair value cannot be reliably measured and derivatives that are linked to and settled by delivery of equity instruments that do not have their quoted prices in an active market are, are measured at costAfter initial recognition, an entity measures all financial liabilities at amortized cost using the effective interest method, except for:a. Financial liabilities at fair value through profit or loss.Liabilities, including derivatives that are recognized as liabilities, measured at fair value, except for a derivative liability that is linked to and settled by delivery of equity instruments that do not have their quoted prices in active markets such as the above and the fair value cannot be reliably measured, are measured at cost.b. Financial liabilities that arise when a transfer of financial assets does not qualify DE recognition or transfer is recorded using the continuing involvement approach.c. Financial guarantee contracts as defined in paragraph 08 of SFAS 55.After initial recognition, the publishers of such contract shall (unless paragraph 47 (a) or (b) applies) measure on which higher among: The amount determined in accordance with SFAS 57 (revised 2009)Provisions,Contingent Liabilities and ContingentAssets,and Amount on initial recognition is reduced, where appropriate, cumulative amortization recognized in accordance SFAS 23 (revised 2010): Revenue.d. Commitments to provide loans below market interest rates.After initial recognition, the publisher of this commitment must be measured at the higher of which: The amount determined in accordance with SFAS 57 (revised 2009)Provisions,Contingent Liabilities and ContingentAssets,and Amount on initial recognition is reduced, where appropriate, cumulative amortization recognized in accordance SFAS 23 (revised 2010): Revenue.Financial liabilities designated as hedged items using measurements based hedge accounting provisions in paragraphs 97-111.

Considerations in the Measurement of Fair Value (Fair Value Measurement Considerations)The best evidence of fair value is quoted prices in an active market.If the market for a financial instrument is not active, an entity set a fair value by using valuation techniques.Such techniques include the use of fair market transactions to date between the parties understand, wish, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models(option pricing model).If there is a valuation technique commonly used to assess the market price of the instrument and that technique has been proven to provide reliable estimates on the price obtained in actual market transactions, the entity uses that technique.Periodically, the entity adjust valuation techniques and test their validity using prices from current market transactions that can be observed on the same instrument (i.e. without modification or repackaging) or based on available market data is observable.Reclassification (Reclassifications)Entities:a. Not allowed to reclassify derivatives are measured at fair value through profit or loss for the derivatives held or issued;b. Not allowed to reclassify any financial instruments measured at fair value through profit or loss if the financial instrument on initial recognition is designated by the entity as at fair value through profit or loss, andc. May, if the financial asset is no longer held for the purpose of sale or repurchase of financial assets in the near future (though the financial asset may have been acquired or incurred principally for the purpose of sale or repurchase in the near term), reclassify financial assets measured at fair value of through profit or loss if the requirements of paragraph 53 or 55 of the SFAS 55 are met.An entity shall not reclassify any financial instrument into the category of fair value through profit or loss after initial recognition.

Gains or Losses (Gains and losses)Gains or losses arising from changes in fair value of financial assets or financial liabilities that are not part of the hedging relationship, is recognized as follows:a. Gains or losses on financial assets or financial liabilities that are classified as instruments measured at fair value through profit or loss is recognized in profit or loss.b. Gains or losses on financial assets classified as available for sale continues to be recognized inothercomprehensiveincome,except for impairment losses and gains or losses from changes in exchange rates, until the financial asset is derecognized.At the time the cumulative gain or loss previously recognized in other comprehensive income of equity should be reclassified to profit or loss as a reclassification adjustment.However, interest calculated using the effective interest method is recognized in profit or loss.Dividends on equity instruments classified as available for sale are recognized in profit or loss when the entity the right to obtain payment of dividends has beenset.

Impairment of Financial Assets and uncollectible (Impairment of Financial Assets and Uncollectible)Financial asset or group of financial assets is impaired and an impairment loss has occurred, if and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (adverse events), and events the adverse impact on the estimated future cash flows of the financial asset or group of financial assets that can be estimated reliably.Objective evidence that a financial asset or group of financial assets is impaired includes observable data that are the concern of the asset holder on adverse events following:a. Significant financial difficulty of the issuer or obligor;b. Breach of contract, such as a default or delinquency in interest or principal payments;c. The lender, with the economic or legal reasons related to the financial difficulties experienced by the borrower, provide relief (concessions) on the borrower that cannot be given if the borrower is not experiencing difficulties;d. There is a possibility that the borrower will enter bankruptcy or other financial reorganization;e. Disappearance of an active market for that financial asset because of financial difficulties, orf. Observable data indicating a measurable decrease in the estimated future cash flows of a group of financial assets since the initial recognition of the asset, although the decrease cannot yet be identified to the individual financial assets in the asset group, including:i. Worsening the payment status of borrowers in the group (ex: increased payment arrears or the growing number of credit card borrowers who reaches his credit limit and can only afford to pay the minimum monthly payments), orii. National or local economic conditions that correlate with defaults on assets in the group (for example, increasing the unemployment rate in the geographical area of the borrowers, a decrease in property prices for property loans in the relevant areas, the decline in oil prices for the loans granted to producers of oil, or a worsening of the condition industry affecting borrowers in the group).The disappearance of an active market for the entity's financial instruments are no longer publicly traded is not evidence of impairment.The fall in the entity's credit rating is not, by itself, evidence of impairment.Decrease in fair value of financial assets below cost or below amortized cost is not necessarily be taken as evidence of impairment (e.g. a decline in fair value of investments in debt instruments resulting from increased risk-free interest rate).

Four Categories of Financial InstrumentsFinancial assets designated as at fair value through profit or loss (a financial asset or financial liability at fair value through profit or loss)Characteristics: Classified as held for trading, or On initial recognition (initial recognition) an entity recognize at fair value through profit or loss (fair value through profit or loss).Other requirements:In order to be classified as held for trading, a financial asset or a financial liability shall be: Acquired or incurred principally for the purpose of selling or repurchasing in the near future. Part of the portfolio or the financial instruments that are managed together and where there is evidence of a pattern of short term profit taking the newest (recent actual pattern of short-term profit-taking). A derivative (except for derivatives that are financial guarantee contracts or hedging instruments)Example: Share portfolio held for short-term gains Forward exchange contract Interest rate swap Call optionCase Example:PT A conduct foreign exchange forward contract with PT B to receive $ 10,000 in 3 months, the forward rate of A $ 1.00 = U.S. $ 0.70.At the time of commencement of the contract, the exchange rate (spot rate on such date) was A $ 1.00 = U.S. $ 0.68, and PT A must recognize the rights and obligations associated with the contract, namely: The right to receive U.S. $ 10,000 to the forward rate within 3 months were worth A $ 14.285 The obligation to pay for the U.S. $ 10,000 within a period of 3 months by sending a $ 14.285.PT A makes record as follows:Forward foreign exchange receivable $ 14.285Forward foreign exchange payable $ 14.285Held to maturityNon-derivatives are financial assets with fixed or determinable payments and maturities have been established, and the entity has the positive intention and ability to hold the asset to maturity.Initial MeasurementThe fair value of the transaction cost +Subsequent MeasurementThe fair value unless the hedged itemReclassificationsBe reclassified when it is no longer appropriate as investments classified as held to maturity, the investment must be reclassified to investments in available-for-sale and re-measured at fair valueGains and LossesRecognized in profit or loss, unless the hedged itemImpairmentLosses are recognized in profit or loss.

Case ExampleIn 2009 the Company Z bond purchase contract for 5 years with a fair value of $ 1000 (including costs incurred during the transaction).The instrument has a principal amount of $ 1,250 with a fixed interest at 4.7% per year.Effective interest rate is 10%.YearAmortized cost at the beginning of the yearInterest income*Cash flows**Amortized cost at the end of the year***

2009100010059th1041

2010104110459th1086

2011108610959th1136

2012113611459th1191

2013119111959 +1250-

* (Amortized cost at the beginningX10%)** (Value pokokX4.7%)*** (Amortized cost at the beginning +-interest income cash flows)Journal of recognition early 2009Held-to-maturity investment $ 1000Cash $ 1000The recognition rate year 2009Held-to-maturity investment $ 41Cash 59Interest Income $ 100Recognition of interest Board 2010Held-to-maturity investment $ 45Cash 59Interest Income $ 104The recognition rate year 2011Held-to-maturity investment $ 50Cash 59Interest Income $ 109The recognition rate year 2012Held-to-maturity investment $ 55Cash 59Interest income of $ 114The recognition rate year 2013Held-to-maturity investment $ 60Cash 59Interest income of $ 119Redemption of investment in 2013Cash $ 1250Held-to-maturity investment $ 1250Loans and receivablesNon-derivative are financial assets with fixed or determinable payments and have no quotations in an active market, except:

A. loans and receivables which are intended by the entity for sale in the near future, which are classified as held for trading, loans and receivables which at the time of initial recognition by the entity designated as financial assets at fair value through profit or loss;B. loans and receivables at initial recognition designates as available for sale, orC. loans and receivables in case the owner may not recover its initial investment, other than because of a substantial decrease in the quality of loans and receivables, and are classified as available for sale.Example: Accounts receivable and services, loans to other entities, credit card receivables.Initial MeasurementThe fair value of the transaction cost +Subsequent MeasurementValue net of amortization unless the hedged itemReclassificationsNot allowedGains and LossesRecognized in profit or loss, unless the hedged item.ImpairmentLosses are recognized in profit or loss

Case ExampleCompany E promised to lend $ 1,000,000 (including transaction costs $ 25,000) to the Company F on July 1, 2009.The interest should be paid in the first 2 years are 2%, and 7% for the next 2 years.The loan repayment period is 4 year. Effective rate is 6.67%.YearAmortized cost (Beginning)Interest ExpenseCash flowAmortized cost (Ending)

2009975.00065.01450.000990.014

2010990.01466.01550.0001,006,029

20111,006,02967.08370.0001,003,112

20121,003,11266.88870,000 + 1,000,000-

Journal of Corporate F are as follows:Initial Recognition:Cash $ 975,000Bond Liability $ 25.000Bond Liability $ 1,000,0002009 Recognition of Interest:Interest Expense $ 65.014Bond Liability $ 15.014Cash 50.0002010 Recognition of Interest:Interest Expense $ 66.015Bond Liability $ 16.015Cash 50.0002011 Recognition of Interest:Interest Expense $ 67.083Bond liability $ 2.917Cash $ 70,0002012 Recognition of Interest:Interest Expense $ 66.888Bond Liability $ 3.112Cash $ 70,000Repayment in 2012:Bond Liability 1,000,000Cash of $ 1,000,000Available for saleFinancial assets are non-derivatives that are designated as available-for-sale or are not classified as loans or receivables, investments are classified as held-to-maturity, or financial assets at fair value through profit or loss.Initial MeasurementThe fair value of the transaction cost +Subsequent MeasurementThe fair value unless the hedged itemReclassificationsAllowed in rare casesGains and lossesRecorded directly in equity, through the statement of changes in equity.When a financial instrument is derecognized, the cumulative value of the remaining in equity should be removed from equity and readjusted back on the income statement.Here are 4 exceptions that should be recognized in profit or loss:1. Impairment loss2. Foreign exchange gains and losses3. Interest calculated using the effective interest method4. Dividends on available-for-sale equity instruments

Impairment When a decline in fair value of financial assets classified as available for sale has been recognized directly in equity and there is objective evidence that the asset is impaired, the cumulative loss previously recognized directly in equity should be removed from equity and recognized in the income loss even though the financial asset has not been derecognized. The amount of the cumulative loss is removed from equity and recognized in profit or loss is the difference between the acquisition cost (net of principal repayment and amortization) and current fair value, less any impairment loss of financial asset previously recognized in profit or loss Impairment losses recognized in the income statement on equity instruments, investments classified as available-for-sale equity instruments are not reversed through the income statement. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increase and the increase can be objectively related to an event occurring after the impairment loss was recognized on profit or loss report, the impairment loss is reversed through profit or loss.Case ExampleDebt InstrumentCompany A invests in the form of debt instrument on July 1, 2009.On this date, the cost and the fair value of these instruments amounted to $ 100,000.Instruments classified as available-for-sale and are measured at fair value and changes in fair value recorded directly in equity.The following table presents the changes in fair value of the debt instrument and the nature of the changes in each year:YearFair value changeNature of change

2010($ 10.000)No objective evidence of impairment

2011($ 20.000)objective evidence of impairment

2012$ 15,000objective evidence of reversal of impairment

Initial recognition on 1 July 2009:Available-for-sale investments $ 100,000Cash $ 100,000Change in fair value for 2010:Equity $ 10,000Available-for-sale investments $ 10,000Impairment loss for 2011:Expense $ 30,000Available-for-sale investments $ 20,000Equity $ 10,000Reversal of impairment losses in 2012:Available-for-sale investments $ 15,000Income (profit or loss) $ 15,000Equity InstrumentCompany A invests in the form of equity instruments at the date of July 1, 2009.On this date, the cost and the fair value of these instruments amounted to $ 100,000.Instruments classified as available-for-sale and are measured at fair value and changes in fair value recorded directly in equity. Table below presents the changes in fair value of the equity instrument and the nature of the changes in each year:YearFair value changeNature of change

2010($ 10.000)No objective evidence of impairment

2011($ 20.000)objective evidence of impairment

2012$ 15,000objective evidence of reversal of impairment

Initial recognition on 1 July 2009:Available-for-sale investments $ 100,000Cash $ 100,000Change in fair value for 2010:Equity $ 10,000Available-for-sale investments $ 10,000Impairment loss for 2011:Expense $ 30,000Available-for-sale investments $ 20,000Equity $ 10,000Reversal of impairment losses in 2012:Available-for-sale investments $ 15,000Equity $ 15,000

Accounting for HedgingHedge accounting recognizes the offsetting effect of the income statement on the changes in fair value of the hedging instrument and the hedged item.Hedging relationship consists of three types:a. Fair value hedge: a hedge against exposure changes in fair value of assets or liabilities that have been recognized, or unrecognized definite commitment, or an identified portion of the assets, liabilities, or definite commitment, which is attributable to a particular risk and could affect profit or loss.b. Cash flow hedge: a hedge of the exposure variability in cash flows that (i) are attributable to a particular risk associated with the asset or liability has been recognized (e.g. all or part of future interest payments on variable rate debt) or that are attributable to a particular risk associated with the forecast transaction that most likely to occur (highly probable), and (ii) could affect profit or loss.c. hedge of net investment in a foreign operation as defined in PSAK 10: Foreign Currency Transactions and PSAK 11: Translation of Foreign Currency

Hedging the Fair Value to a HedgingIf a fair value hedge meets the conditions during the financial reporting period, the hedge should be recorded as: a. gain or loss from re-measuring the hedging instrument at fair value (for a derivative hedging instrument) or the foreign currency component of the carrying value as measured by PSAK 10: Foreign Currency Transactions and PSAK 11: Translation of Foreign Currency (for non-derivative hedging instrument) is recognized in the income statement, andb. Gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and recognized in the income statement. This provision applies if the hedged item is not measured at cost. The recognition of gains or losses attributable to the hedged risk in profit or loss applied if the hedged item is a financial asset available for sale.Entities applying prospectively discontinue hedge accounting as if:a. the hedging instrument expires or sold, discontinued or carried outb. a hedge no longer meets the criteria for hedge accounting, orc. an entity that has been done to unassigned

Hedging of Cash FlowsIf a cash flow hedge meets the conditions in paragraph 90 during the financial reporting period, the hedge should be recorded as:a. part of the gain or loss on the hedging instrument determined as an effective hedge recognized directly in equity through the statement of changes in equity (see PSAK 1: Presentation of Financial Statements), andb. Ineffective portion of profit or loss on the hedging instrument is recognized in profit or loss

Hedge of net investment in foreign operationsHedge of net investment in foreign operations, including monetary item hedges recorded as part of net investment (based on PSAK 10: Foreign Currency Transactions and PSAK 11: Translation of Foreign Currency), recorded in the same way as cash flow hedge:a. part of the gain or loss on the hedging instrument determined as an effective hedge (see paragraph 90) recognized directly in equity through the statement of changes in equity (see FRS 1 Presentation of Financial Statements), andb. Ineffective portion is recognized in the income statement. Gains or losses on the hedging instrument relating to the effective portion of hedging that previously recognized directly in equity should be recognized in the income statement when the investments in foreign operations are disposed.

PSAK 55 REVISED APPLICATION OF TROUBLE IN THE WORLD BANK 2006

PSAK 55 was adopted from IAS 39 would indirectly impact on financial assets, financial liabilities and derivatives. In general, financial instruments affected by the application of PSAK 55 are loans, securities, time deposits, marketable debt (bonds, MTN, etc.) and borrowings. Some of these difficulties include:a. Must have adequate infrastructure to apply PSAK 55. The infrastructure is intended to include human resources and IT companies.b. Must have supporting data are required, such as data loss historical and transactional data from fellow banks.c. Banks are required to have the competence to develop a methodology suitable internal condition, such as having rebuilt credit policy. Must restructure the credit policy is due to change in the recognition of assets, bank credit as a loan and receivable which valuation is to amortized cost. It is a consequence that the value of the credit (in this case the bank's assets) will be affected by the projected cash flow from the asset, so that the loan bears interest at below market interest rates will be less than the discounted at cost (loans disbursed).

CHAPTER 3CONCLUSION

The application of PSAK 55 is expected to drive the process of harmonization of the preparation and analysis of financial statements and market discipline. In addition, the application of PSAK 55 correctly and consistently encourages the entity to present its financial statements in a more fair and informative. PSAK in Indonesia have problems because of the changes that have done quite a lot, as well as make changes in internal systems, business processes, and human resources within the company that cannot be met by most companies in Indonesia. Due to some difficulties, DSAK IAI and Bank Indonesia provides the transition to the Bank that cannot be fully implemented PSAK 55. However, banks can follow the transition must meet the criteria set by the Bank, namely: First, banks do not have adequate infrastructure to apply PSAK 55.Second, banks do not have the supporting data are required, such as historical loss data is also a fellow of the bank transaction data. Third, the bank does not have the competence to develop methodology suitable internal conditions

BibliographyDewan Standar Akuntansi Keuangan. (n.d.). Pernyataan Standar Akuntansi Keuangan No. 55 Revisi 2009.