20. Surf School Ltd has six employees who are entitled to long-service leave (LSL). The LSL can be taken after 10 years of service, at which time the employee is entitled to 13 weeks' leave. Entitlements to payment on departure arise after eight years of service. The following information about the employees is available: No. of employees 2 NIN 2 2 Current salary Years of of employees service ($) 50,000 65,000 70,000 6 7 8 Probability (%) that LSL will be paid 45 70 100 Periods to maturity 4 3 2 High-quality corporate bond rate (%) 9 7 6
20. Surf School Ltd has six employees who are entitled to long-service leave (LSL). The LSL can be taken after 10 years of service, at which time the employee is entitled to 13 weeks' leave. Entitlements to payment on departure arise after eight years of service. The following information about the employees is available: No. of employees 2 NIN 2 2 Current salary Years of of employees service ($) 50,000 65,000 70,000 6 7 8 Probability (%) that LSL will be paid 45 70 100 Periods to maturity 4 3 2 High-quality corporate bond rate (%) 9 7 6
Chapter3: Social Security Taxes
Section: Chapter Questions
Problem 17PB
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20. Surf School Ltd has six employees who are entitled to long-service leave (LSL). The LSL can be
taken after 10 years of service, at which time the employee is entitled to 13 weeks' leave.
Entitlements to payment on departure arise after eight years of service. The following information
about the employees is available:
No. of
employees
2
2
2
Current salary Years of
of employees
service
($)
50,000
65,000
70,000
6
7
8
Probability
(%) that LSL
will be paid
45
70
100
Periods to
maturity
4
3
2
High-quality
corporate
bond rate (%)
9
7
6
Employees' salaries are expected to increase by 2.5 per cent per annum. The opening balance of
the LSL provision was $32 500, and the interest rate for corporate bonds for all relevant periods to
maturity was 8 per cent at the beginning of the year.
Required:
a) What is the accounting journal entry to record LSL expense for the current period (round
amounts to the nearest dollar)?
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