Accounting for SALAM

And Parallel SALAM

Reference: Akuntansi Perbankan Syariah:

Teori dan Praktik Kontemporer
Yaya, R., Martawiredja, A.E. dan Abdurahim, A.
(2014), Salemba Empat, Jakarta.
 DEFINITION OF SALAM AND PARALLEL SALAM

• Bai’ as salam or sometimes called salam, is purchase of

commodity for deferred delivery in exchange for
immediate payment according to specified conditions
• Salam is a contract which allows the sale of something
which does not exist at the time of sale. This is because in
agriculture the commodities have a long lead time to
produce.
• Parallel Salam is a contractual arrangement that
consists of two different and independent contracts; one
in which the bank is a buyer and the other one in which
bank is a seller. The two contracts cannot be tied up and
performance of one contract should not be contingent
upon the other
 KETENTUAN SYAR’I, RUKUN TRANSAKSI DAN
PENGAWASAN SYARIAH TRANSAKSI SALAM DAN SALAM
PARALEL
 The basis of Salam and Parallel Salam

The shariah basis of Salam contract is a hadith narrated by

Ibnu Abbas :

“ Whoever pays for dates on a deferred delivery basis (salam)

should do on the basis of a specified scale and weight”

Salam is regulated by DSN fatwa No. 05/DSN-

MUI/IV/2000 about Salam trading. This Fatwa regulates
the payment, commodity, parallel salam, time of delivery
and cancellation.
Accounting for Salam is regulated in PSAK 103
 Rukun (requirement) of Salam
Requirements in salam consist of:
(a) transactors: Buyer (muslam) and seller
(muslam ilaih);
(b)The subject matter of salam (muslam fihi)
that is the commodity to be delivered
(c)ijab and kabul the agreement between the
seller and purchaser.
 A. Transactors Requirements of Salam
• Transactors consist of buyer (muslam) and seller (muslam
ilaih).
• Both parties should competencies such as mature (aqil
baligh), not under presssure of other parties. For those who
are still underage, salam contract can be represented by
his/her wali.
• DSN fatwa No. 05/DSN-MUI/IV/2000 requires the seller to
deliver the commodity on the basis of specific scale, weigth and
date of delivery.
• The seller can deliver the commodity before the due date as
long as the commodity is not in inferior quality or in lesser
quantity. The seller cannot ask for extra payment.
 Requirements of Salam
B. The subject of Salam
DSN states some terms and conditions for salam contract:
1. The subject matter should be known
2. Specification to be based on description given by the
muslam
3. Delivery of commodity is deferred
4. Date and place of delivery should be specified
5. The buyer is not allowed to sell the commodity until the
subject matter is received.
6. Replacement of subject matter is prohibited, unless it is
similar goods
 Requirements of Salam

• Regarding the payment, DSN requires to

specify the medium of payment as well as
mode of payment
Medium of payment can be in the form of
cash, goods or benefit. It should be
specified at the contract agreed. However,
scholars agreed that the payment cannot
be in the form of payable settlement.
 Requirements of Salam
C. Ijab and Kabul

Ijab and Kabul is the agreement between two

parties involved. There will be an offer from the seller
(bank) and acceptance from the buyer (customer).

The pronouncement of the agreement can be

through oral, sign, or written, as long as both parties
agree.
Requirement of Parallel Salam
According to DSN fatwa No. 5 Tahun 2000,
the execution of the second salam contract
should be separated from the execution of the
first one.
The second salam can be executed after the
first one is done.
 Shariah control on Salam and Parallel Salam

a) The subject matter should comply the shariah (not

something haram);
b) The payment has been made fully upon the agreement of
the contract
c) Should comply fatwa of DSN-MUI and any regulations from
Bank Indonesia;
d) The agreement should be cleas between salam and parallel
salam;
e) Bank’s profit parallel salam is from the margin between
selling price and purchase price.
 SALAM and PARALLEL SALAM FLOW
1.
5s
•Islamic bank as Negotiation
seller and aqad Customer
(muslam ilaih) at Salam
salam 1 and 2. payment as buyer
buyer (Muslam) (Muslam)
at salam 2
6. Document
delivery
4. Payment
Vendor 5. Delivery of good
3. Negotiation
& aqad salam
CALCULATION AND DAN RECOGNITION OF
SALAM CONTRACT
Case 1 : First Salam Contract
On 1 June 20XA PT Thariq Agro Mandiri entered into salam
contract with Bank Syariah Mandiri to supply 100 tons of
sweet corn to be exported in the nexth six months. The
details of the contract are as follows:
 Subject mmater : Hybrid Sweet corn No. 2
 Quantity : 100 tons
 Price : Rp700.000.000 ( Rp7.000.000 per ton)
 Time of delivery: every three months for 50 ton each (2
September and 2 Desember 20XA)
 Payment : fully payment upon the contract agreed
 The Second Salam contract
To fulfill the supply for PT Thariq Agro Mandiri, bank therefore entered
another salam contract with KUD Tunas Mulia on 2 June 20XA. The
details are as follows:
‾ Subject matter : Hybrid Sweet corn No. 2
‾ Quantity : 100 tons
‾ Price : Rp650.000.000 (Rp6.500.000 per ton)
‾ Payment : cash Rp650.000.000
‾ Time of delivery: every three months 50 ton foe each (1 September
and 1 December 20XA)
‾ collateral : land and vihecle at fair value Rp700.000.000
‾ Term of payment : fully payment upon the contract agreed
‾ Penalty due to neglect 2% out of the value of subject matter
 Journal entries
a. Upon recipient of payment from the buyer
Journal: Bank received payment from PT Thariq Agro
Mandiri (PT TAM) for salam contract amounting
Rp700.000.000,

Date Account Debit (Rp) Credit (Rp)

01/06/XA Db.Cash/saving account – PT. 700.000.000
TAM

Kr. Salam payable 700.000.000

 b. Payment to the farmer

Journal: On 2 June, bank paid KUD amounting

Rp650.000.000 for the second contract :

Date Account Debit (Rp) Credit (Rp)

02/06/XA Db. Salam receivable 650.000.000
Kr. Cash/saving account – 650.000.000
KUD TM
 c. Delivery of commodity from the farmer

There are three probability of the quality of commodity

delivered;
(1) The quality is similar with the agreed contract;
(2) The quality is lower than agreed in the contract
(3) The quality is higher than agreed in the contract
(1) The quality is similar to the agreed contract;

According to PSAK No. 103 Para 13a, if the quality of

commodity is similar with agreed contract, is should be
recognised at the agreed price.

On 1 September dan 1 December

respectively, KUD TM delivered 50 tons of
hybrid sweet corn N2 to the bank. The fair
value of the commodity for every delivery is
Rp325.000.000 (50 ton × Rp6.500.000 per ton).

dept of acct - umy

 Journal:

Date Account Debit (Rp) Credit (Rp)

01/9/XA Db. Salam inventory 325.000.000
Cr. Salam Receivable 325.000.000

Note: delivery of 50 tons sweet

corn from the farmer to bank

01/12/XA Db. Salam inventory 325.000.000

Cr. Salam Receivable 325.000.000
Note: delivery of another 50
tons sweet corn from the farmer
to bank

dept of acct - umy

 d. Delivery to the final buyer

Bank delivered the sweet corn to PT TAM on 2 September and 2

December for 50 tons each :

Date Account Debit (Rp) Credit (Rp)

02/09/XA Db. Salam payable 350.000.000
Cr. Salam inventory 325.000.000
Cr. Salam income 25.000.000

02/12/XA Db. Salam payable 350.000.000

Cr. Salam inventory 325.000.000
Cr. Salam income 25.000.000
 The quality is lower than agreed in
the contract
• Assuming that KUD TM could only deliver 50 tons of
sweet corn No 3. The fair value of the commodity is
Rp300.000.000. The difference in price should be
recognised as loss
Salam Inventory 300.000.000
Losses on salam contract 25.000.000
Salam Receivable 325.000.000

dept of acct - umy

 The quality is higher than agreed in
the contract
• If the quality of the commodity is higher than the
agreed contract, it should be recognised at the contract
value
• Assuming that KUD delivered sweet corn no 1 and the
fair value of the commodity is Rp350.000.000
Salam inventory 325.000.000
salam receivable 325.000.000

dept of acct - umy

 Salam contract with non cash assets
• PSAK 103 para 12 allows the use of non cash assets for
Salam contract.
a. Fair value of assets = book value

Bank entered salam contract with KUD and transferred

machinery assets at fair value Rp25.000.000. The
cost of asset was Rp30.000.000 with accumulated
depreciation Rp5.000.000

dept of acct - umy

 Salam receivable 25.000.000
Accm dep 5.000.000
Salam aset-machinery 30.000.000

dept of acct - umy

 b. Fair value is higher than book value
Assuming the fair value of asset is Rp27.000.000

Salam receivable 27.000.000

Accum dep 5.000.000
Salam asset-machinery 30.000.000
Gain on salam 2.000.000

dept of acct - umy

 c. Fair value is lower than book value
Assuming the fair value is Rp23.000.000

Salam receivable 23.000.000

Accum dep 5.000.000
Loss on salam 2.000.000
Salam asset-machinery 30.000.000

dept of acct - umy

 Cancellation of salam contract
• Assuming KUD could not make the delivery, hence
bank cancelled the contract

Qardh receivable – KUD TM 325.000.000

Salam receivable 325.000.000

dept of acct - umy

 Settlement of qard receivable
• The customer can pay the payable through two
method, cash or allows the bank to sell the collateral
a. Cash

Db Cash 325.000.000
Cr.Qardh receivable-KUD TM 325.000.000
b. Sell the collateral at 300.000.000
Cash 300.000.000
Qardh receivable 300.000.000

dept of acct - umy

 c. Sell collateral at 350.000.000
Cash 350.000.000
Saving account KUD 25.000.000
Qardh receivable 325.000.000

dept of acct - umy