The financial statements describe the financial effects of transactions and

other events that occur in an entity. The elements of financial statements are
classified in several groups according to their economic characteristics. Elements
related to financial position are assets, liabilities, and equity. The elements related
to the measurement of an entity's financial performance are revenues and expenses.
Misstatement on income items will affect investors' economic decision-making
behavior. Therefore, it is necessary to pay attention to aspects of measurement,
recognition, and valuation of income. In international accounting standards, the
recognition of income from contracts with customers is regulated in IFRS15. In
Indonesia, IFRS 15 Revenue from Contracts with Customers is adopted by PSAK
72 Revenue from Contracts with Customers which is effective January 1, 2020
(IAI, 2016).
Scope IFRS 15 (PSAK 72 in Indonesia) Revenue from Contracts with
Customers applies to all contracts with customers except for: 1. contracts within
the scope of the lease, IAS 17 (PSAK 30); 2. insurance contracts, IFRS 9 (PSAK
62); 3. financial instruments and other contractual rights or obligations (ED PSAK
71; PSAK 65; PSAK 66; PSAK 15; PSAK 4); 4. non-monetary exchanges between
entities in the same line of business to facilitate the sale of customers or potential
customers.
IFRS 15 introduces a revenue recognition model in which revenue will be
recognized to be able to describe the delivery of goods or services promised to
customers that reflect the payment that the entity expects to receive for the goods
or services. Based on the revenue recognition model, IFRS 15 introduces 2 (two)
revenue recognition approaches that can be used by entities in recognizing the
income, namely: a) Revenue is recognized at a certain time; or b) Revenues are
recognized over a specified period of time.
 To be able to determine the revenue recognition approach at IFRS 15, an
entity must first analyze the transaction based on the contract, which consists of the
following 5 (five) stages:
1. Identify the contract with the customer
The contract in question can be in the form of written, oral or implied in
certain business practices, but it must be enforced and must have
commercial substance. In this stage the entity must ascertain the possibility
of payment addiction for the goods or services delivered to the customer. In
assessing whether the collectibility of payments is most likely to be
obtained, the entity only considers the ability and intention of customers to
make payments when due.
2. Identify the performance obligations in the contract
After successfully identifying the contract, the entity must be able to identify
the goods or services, or what combination of goods or services were
promised in the contract, which will be recorded as a separate performance
obligation.
3. Determine the transaction price
The transaction price in question is the amount of payment expected to be
obtained by the entity.
4. Allocate the transaction price to the performance obligations in the contracts
The purpose of allocating transaction prices is so that the entity can allocate
transaction prices to each performance obligation that can be identified from
the contract in the amount that represents the payment expected by the entity
to be obtained in return for delivering the goods or services that have been
promised to the customer.
5. Recognize revenue when (or as) the entity satisfies a performance
obligation.
 An entity is deemed to have fulfilled performance obligations by giving up
control of the assets or services promised to the customer, which can occur
for a certain period of time or at a certain time. Performance obligations are
fulfilled at a certain time, unless they meet one of the following criteria, so
they are considered as fulfilled during a certain period of time:
a. The customer simultaneously receives and uses the benefits provided by
the performance obligations performed by the entity;
b. Performing performance obligations by the entity creating or increasing
assets that are controlled by customers when the assets are created or
enhanced.
c. The performance of performance obligations by the entity does not
create assets that have other alternative uses for the entity and the entity
also has a enforceable right to obtain payment for the performance
obligations that have been completed up to that date.

Based on our analysis, Garuda's contract with Mahata is the scope of IFRS
15. The contracts created enforceable rights and obligations between both parties,
Garuda and Mahata. Moreover, this contract includes IFRS 15 scope since the
contract (based on the contract stated to BEI letter) is not stated as leases,
insurance contracts, financial instruments, or non-exchange interchange between
entities in the same line of business.
Therefore, `Following is the Implementation of IFRS 15 for the Recognition
of PT Garuda Indonesia (Tbk) Revenues for contracts with PT Mahata:
1. Identify contracts with customers
According to IFRS 15, a contract is an agreement between two or more
parties that creates enforced rights and obligations. PT Garuda Indonesia
(Tbk) has a contract with PT Mahata Aero Teknologi in the form of
 providing connectivity services in aviation and management of In-Flight
Entertainment and Content Management, 15-year contract with a payment
scheme after signing the contract. Garuda and Mahata contract has been
approved by the parties to the contract. Both Garuda and Mahata's rights in
relation to the goods or services to be transferred can be identified, we can
see it through the contract letter issued by Garuda for reacted BEI Letter.
But there are some points in IFRS 15 which should be identified in the
contract with the customer were not met by the contract:
a. The payment terms for goods or services to be transferred from Garuda to
Mahata are not identified, no exact date at the contract letter.
Payment term of contract between PT Garuda Indonesia Tbk. with PT
Mahata Aero Teknologi (Mahata) in no detail. IDX Corporate
Assessment Director I Gede Nyoman Yetna Setia said in the second
contract, it was not clear when the receivables bill must be paid. Also,
nothing detailed is arranged if the parties do not carry out their
obligations
b. it is unlikely that consideration is due to the entity in return for goods or
services will be collected in the amount of USD 234 million will be
collected
The contract explained that Mahata would surrender compensation costs
to Garuda after the cooperation contract was signed. However, Mahata
did not submit the slightest compensation, and Garuda only gave an
invoice.
2. Identification of implementation obligations
For each of the obligations of Garuda and Mahata are clearly stated in the
contract. However, the contract does not provide detailed arrangements if
the parties do not carry out their obligations. Then, the written obligation is
 only limited to written on paper, like. In the mahata obligation section:
Providing, installing, operating all equipment and connectivity services and
In-Flight Connectivity Services, in-flight entertainment and content
management services. However, since the contract was held on October 31,
2018, Mahata only installed one device. Then, Garuda has an obligation to
evaluate every two months for the implementation of the cooperation
contract. From October to December, Garuda should have conducted an
evaluation, but in reality compensation had not yet been redeemed and the
installation of service equipment had not been phased in to at least 10
aircraft.
3. Determine the price of the transaction
Based on the contract between PT Garuda Indonesia and PT Mahata, Mahata
must pay a transaction of USD 241.94 Million with a 15-year contract
period. But the contract again is not in accordance with IFRS 15 due to
neglected variable considerations when determining the transaction price.
variable consideration is any variable considered if the amount an entity will
receive is contingent on a future event occurring or not occurring, even
though the amount itself is fixed. The contract should determine the
transaction price of USD 241.94 Million is allocated for 15 years, per year
how much just by considering the variable consideration.
4. Allocate transaction prices to implementation obligations
When Garuda has multiple performance obligations, Garuda has to allocate
the transaction price to the performance obligations in the contract. The
obligation has not been implemented, but the transaction price has been
determined, Garuda should record the price of the transaction if it has carried
out its obligations.
 5. Recognize revenue when or as long as the entity has completed its
implementation obligations.
Based on the contract that occurred, Garuda recognized contract revenue
from Mahata when it had surrendered the right to install connectivity service
equipment and management rights for In-Flight Entertainment at the time
the agreement was signed, so that all ownership benefits previously recorded
on Garuda Group revenue were terminated and handed over to Mahata.
Although in the contract it is said that Garuda has surrendered the
installation rights entirely to Mahata, but Garuda should receive
compensation as the exchange he gave to Mahata. The compensation in the
form of USD 234 Million was supposed to be received in the form of cash,
not receivable. These receivables were also not clearly stated when payment
was made. If the payment time is not regulated in detail, there is a possibility
that payment of receivables can be made at any time, even up to several
years into the future. In fact, this is important because the receivables have
been included as one of Garuda's revenues in the company's 2018 Financial
Statement.

Therefore, we consider that the revenue recognition approach that should be

used by Garuda in contracts with Mahata is to recognize income over time rather
than Garuda, which is to recognize revenue at a point in time. Over time is
recognized because Mahata simultaneously receives and consumes benefits
provided by Garuda when carrying out its implementation obligations (criterion
point 1).
Garuda should not recognize the initial contract revenue at once, while the
15-year contract. One of the revenue receipts is the transfer of risk. When the
contract is in progress and there are already some planes that have been mounted, it
means the transfer of risk from Garuda to Mahata is already running. But at the
time of recording the financial statements, by the end of 2018, Mahata had only
paired one device, meaning that Garuda had only transferred 1 aircraft risk, but the
revenue recorded as if Mahata had paired the device with 50 A320 aircraft, 20
A330 aircraft, 73 Boeing 737 aircraft -800 NG, 10 Boeing 777 aircraft, 18 A330
planes, 70 Boeing 737-800NG planes, 1 Boeing 737-800 MAX aircraft and 10
Boeing 777 aircraft (Under contract). Like a word, Garuda has not yet transferred
risk, but revenue has been recognized. After all, income has a matching concept,
revenue and expense recognized together in the same period. Once we recognized
revenue, we have to charge or allocate the cost to expense. While in here, there's
no cost accrued and allocated to expense yet, and the revenue has been recognized.
those USD 239.940 Million supposed to be allocated over multiple periods
when manfaat dan beban really occurred. Those 239.94 Million should be allocated
over 15 years contract.

Disclosures (Based on IFRS15):

For disclosure, Garuda and Mahata's contracts are also not in accordance
with IFRS15. Because in its financial statements, Garuda does not disclose
sufficient information to enable users of financial statements to understand the
nature, amount, timing and uncertainty of revenue and cash flows arising from
contracts with Mahata. There are no qualitative and quantitative information about
its contracts with Mahata; the significant judgments, and changes in the judgments,
made in applying the guidance to those contracts; and any assets recognized from
the costs to obtain or fulfill a contract with Mahata. The proof is that the IDX has
provided a letter requesting an explanation of this contract to Garuda, because
there is no detailed information about the contract in the financial statements.
Whereas Garuda should provide information related to this contract or provide
information in the financial statements because the amount is significant, the
stakeholder needs it.