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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sky Ltd started operating on 1 July 2017 with 13 employees. 8 years later, all of those employees were still with the company. On 1 July 2019, the company hired 13 more people but by 30 June 2025, only 8 of those employed at the beginning of that year were still employed by Sky Ltd. All employees are entitled to 13 weeks long-service leave after a conditional period of 10 years of employment with the company. Below is the information available as of 30 June 2025: • The aggregated annual salaries of all employees hired on 1 July 2017 is now $700,000. • The aggregated annual salaries of all current employees hired on 1 July 2019 is now $600,000. • Salaries are expected to increase indefinitely at 5% per annum. • The probability that employees hired on 1 July 2017 will continue to be employed for the duration of the conditional period is 54%. • The probability that employees hired on 1 July 2019 will continue to be employed for the duration of the conditional period is 46%. • The opening balance of the provision for long-service leave was $6,000. The interest rates on high-quality corporate bonds are as follows: 1 July 2024 30 June 2025 Maturing in 2 years 4% 5% Maturing in 3 years 7% 8% Maturing in 4 years 8% 6% Maturing in 5 years 9% 9% What is the long-service leave provision expense recognised as of 30 June 2025? a. 220652 O b. 154933 O c. 109460 d. 69600 e. 103460
Transcribed Image Text:Sky Ltd started operating on 1 July 2017 with 13 employees. 8 years later, all of those employees were still with the company. On 1 July 2019, the company hired 13 more people but by 30 June 2025, only 8 of those employed at the beginning of that year were still employed by Sky Ltd. All employees are entitled to 13 weeks long-service leave after a conditional period of 10 years of employment with the company. Below is the information available as of 30 June 2025: • The aggregated annual salaries of all employees hired on 1 July 2017 is now $700,000. • The aggregated annual salaries of all current employees hired on 1 July 2019 is now $600,000. • Salaries are expected to increase indefinitely at 5% per annum. • The probability that employees hired on 1 July 2017 will continue to be employed for the duration of the conditional period is 54%. • The probability that employees hired on 1 July 2019 will continue to be employed for the duration of the conditional period is 46%. • The opening balance of the provision for long-service leave was $6,000. The interest rates on high-quality corporate bonds are as follows: 1 July 2024 30 June 2025 Maturing in 2 years 4% 5% Maturing in 3 years 7% 8% Maturing in 4 years 8% 6% Maturing in 5 years 9% 9% What is the long-service leave provision expense recognised as of 30 June 2025? a. 220652 O b. 154933 O c. 109460 d. 69600 e. 103460
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