Beruflich Dokumente
Kultur Dokumente
47
contents
paragraph
preface 01 - 03
objective 04
scope 05 - 06
definitions 07
elucidation 08 - 27
recognition of land 08
initial recognition of land fixed asset 09
cost components 10
acquisition on a collective basis 11
exchanges of land fixed asset 12
donated land 13
subsequent expenditures after acquisition 14 - 16
subsequent measurement of the initial recognition 17 - 18
depreciation 17 - 18
write off and disposal 19 - 24
presentation 28 - 29
disclosures 30 - 32
effective date 33
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accounting of land sfas no. 47
preface
01.c. domestic land is land located in the geographical area of indonesia, which
is divided into three zones, namely bonded zones, zones under the
jurisdiction of representatives of foreign countries and the customs zones.
the land laws regulate in general the rights on land for the two areas and
specifically regulates bonded zones. zones under the jurisdiction of foreign
countries’ representatives are related to the representative offices of
foreign countries or embassies.
01.d. overseas land is a land located outside the indonesian area, subject to land
laws other than those of indonesia. the legal ownership of land is dictated
by the legal norms of the respective countries.
the acquisition and control of land requires complete legal documentations. the
costs to obtain complete legal documentation is accumulated as deferred cost. the
absolute ownership of land is restricted by article 33 paragraph (3) of the 1945
constitution, which states that land and waters and the natural wealth contained
therein should be controlled by the state and should be utilized for the maximum
welfare of the people. thus, various types of rights to land ,other than ownership,
have arisen.
if the requirements of the law are fulfilled by the holder of the land right and the
land is not utilized for public interest, it is still possible to renew the land right,
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accounting of land sfas no. 47
which is not an ownership right, after the extension period expired. however,
based on the spirit of article 33 paragraph (2) of the constitution, even an
ownership right can be revoked for the sake of public interest.
02.a. for the purpose of this statement, land ownership based on whatever right is
called a land accompanied by disclosure of the type of right and useful
period. the land ownership based on various types of rights cannot be
depreciated, unless it is anticipated that it will be impossible or that the
possibility is highly unlikely for the management to obtain an extension or
renewal of the right.
02.b. deferred costs incurred for the legal processing of the land right in the form
of a document giving a certain right, including the extension of a certain
right, renewal of a certain right , to entities to use the land should be
calculated based on the rate according to prevailing law and regulations,
paid to the government. if it is considered material, these amounts should be
presented separately from other deferred costs account and amortized in a
systematic and rational manner over the useful period accompanied by
disclosure of type of rights, useful life and method of amortization.
a. sfas no. 10 paragraph 32 and sfas 4 for the capitalization of extra ordinary
exchange loss relating to the acquisition of land fixed asset with borrowings
denominated in foreign currencies.
f. sfas 37 dealing with the operation of state land, for example the land on
which the toll road is built.
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accounting of land sfas no. 47
objective
scope
05. this statements deals with the accounting for land as a fixed asset and the
deferred costs for the legal processing of land right and therefore these
statements does not relate to :
06. this statement is a supplement to sfas 16 regarding fixed assets and other
assets ,in general, and deferred costs in particular, so that all parts of sfas 16
which do not contradict this statements should apply to the accounting for
land and deferred costs - land right.
definitions
land is a tangible asset which is acquired ready for use, or acquired and
subsequently improved until it is ready for use in the entity’s operations with
an economic benefit of more than one year, and is not intended to be traded
in the normal operating activities of the entity.
deferred costs for the legal processing of land right are the costs incurred to
obtain all rights issued by the government based on laws and regulations. the
type of right, the limitation of the right and the validity of the right are
explicitly shown on the document of right. the ownership right has no time
limitation of ownership, and accordingly cannot be classified as deferred
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costs, thus these costs should be capitalized as a cost component of the land
acquisition costs. other types of right outside the ownership certificate have
a limitation of the validity period, although these rights can be extended or
renewed. unlike other intangible assets, deferred costs incurred due to the
acquisition of land right are closely related to the physical condition of the
land.
a. the time period of the use of land asset which can expected to be
achieved, or
b. the time period during which the expected total production units can be
produced by the land asset.
c. the effective period of the rights, if the rights is not renewable or
extendable, if item c is shorter than item a or b.
the useful life of a deferred costs due to the acquisition of a land right is the
useful life of the land or the validity of a non-extendable or non-renewable
land right, whichever is shorter.
the fair value of a land is the objective market price on the acquisition date
or based on the generally accepted appraisal of a professional, whichever is
more reliable.
the fair value of infrastructure and facilities is the objective market value on
the acquisition date or based on the generally accepted appraisal of a
professional, whichever is more reliable.
elucidation
recognition of land
08. the acquisition cost of land fixed asset developed on its own represents the
accumulation of all acquisition and improvement cost , in the form of total
cost of getting the land ready for its intended use, exclusive deferred costs
due to the legal processing cost of the land right.
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accounting of land sfas no. 47
with paragraph 13 of this statements plus the component of legal costs only.
cost components
deferred costs for the legal processing of land right include the following:
a. legal audit costs such as the verification of the authenticity of the land
certificate(deed), urban plan.
b. measurement cost – staking out and mapping.
c. public notary fee, transaction fees and land deed official’s fees.
d. taxes related to the purchase and sale of land
e. official fees which must be paid to the state treasury for the acquiring,
extension or renewal of right, either the status or the allocation.
because these deferred costs have different characteristics from other deferred
costs, are closely related to land, and have their own amortization model, they are
presented separately from other deferred costs on the balance sheet.
joint acquisition
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if the fair value of land is very reliable, the price of land should be
determined first, thereafter the remainder should be capitalized as the
acquisition costs of the facilities and infrastructure. the same procedures
should apply, i.e. if the price of the facilities and infrastructure is very
reliable, but the price of land is difficult to determine.
12. the exchanges of land fixed asset should be accounted for in accordance with sfas
no. 16.
donated land
13. donated land obtained should be recorded based on the fair value at the
location and should be recognized as capital originating from donation in
accordance with sfas no. 21 regarding equity accounting.
a. increasing the elevation of the parking lot in the shopping area which is
often flooded by rain fall, thereby increasing the number of shoppers
during the rainy season.
b. post- acquisition expenditures on swamp land in the formof landfills so
that the land reclassified firm, thus increasing value of the land.
c. the cost of construction of safety poles and or anti-erosion structure for
land located at the shore that will enhance the safety of the building and
avoid the land area from shrinking and loss.
15. expenditures to maintain the condition of the land so that it will function
normally in accordance with the initial plan, taxes and local fees related to
land should be charged to the profit and loss account for the current year.
16. expenditures related for the extension of right/title which extends the useful
life should not be added to the recorded value of the land, but should be
recorded as deferred costs. expenditures for the extension of right/title which
are immaterial should be charged to the current year profit and loss account.
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depreciation
18. land fixed asset is be depreciated except under the conditions explained in
paragraph 17. the depreciation method should be based on sfas no. 17,
depreciation accounting, selected in line with the land utilization pattern of
the business activities.
19. land donated or granted in part or in its entirety should be substracted from
the carrying value of the land on the balance sheet by debiting the current
year’s profit and loss accompanied with the necessary disclosure. donated
land should be disclosed in the notes to the financial statements including the
economic reasons and consideration for commercial entities or social reasons
for such action by a non-profit entity.
deferred costs of land rights related to land donated or granted land in its
entirety should be written off from the balance sheet by debiting the
current’s year profit and loss account. deferred costs of land right related to
land which is partly donated or granted should not be affected, as long as the
allotment of the land use does not change.
20. losses due to land taken over by the state for public interest, with or without
compensation, after deducting any compensation received or most probably
will be received, should be charged to the current year profit and loss
account.
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21. land, the area of which, physically decreases due to natural erosion, should
proportionately reduce the carrying value of the land asset on the balance
sheet date which should be charged to the current year profit and loss
account. the carrying value should be depreciated over the period of
remaining economic or legal benefit, whichever is shorter.
22. land which is not utilized for company operations, cannot be leased out and
has no sale value, should be eliminated from the balance sheet by charging it
to the current year profit and loss account.
23. if the land concerned can be sold, the carrying value should be written down
to the conservative net realizeable value.
24. deferred costs in the form of a land right must be proven by a valid evidence
of ownership. a land right, either new or extension or a renewal title ,should
be recognized as deferred costs.
25. deferred costs in the form of a land right should be recorded at the
acquisition cost of the right or the cost of extending the right or the cost of
renewing the right.
amortization
26. all deferred costs related to rights should be amortized over the legal or
economic life of the land asset, whichever is shorter.
27. the method of amortization should be in line with the utilization pattern of
the land right in the company operations, in line with paragraph 21, which
should be followed systematically and consistently. the utilization pattern
and the economic life of the deferred costs must be evaluated periodically
and should be changed in line with the very latest conditions.
presentation
28. land should be presented as part of the tangible fixed asset group.
29. all rights on land should be presented as deferred costs - land right on the
balance sheet, separated from other deferred costs.
disclosures
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30. sfas no. 1 regarding the disclosure of accounting policies remains valid for
land fixed asset in explaining the substance of the land account on the
balance sheet. in addition to sfas no. 16 paragraphs 73 - 75 and sfas no. 17
paragraphs 12 and 17, the following information must be disclosed in the
notes to the financial statements :
31. reclassifications of the status of land on the balance sheet must be disclosed,
for example other asset which are reclassified to land fixed asset, real estate
inventory or land which are reclassified to land fixed asset, land investment
which are reclassified to land fixed asset and the reverse.
32. information on deferred costs - land rights should be disclosed in the notes to
the financial statements, in particular :
effective date
33. this statement is effective for the preparation and presentation of financial
statements covering the reporting period beginning with or after 1 january,
1999. early implementation is encouraged.
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