At the beginning of current year, Zamba Company announced the decision to close the factory located in Zamboanga and terminate all 150 employees as a result of economic downturn. The entity shall pay P30,000 per employee upon termination. However, to ensure that the windup of the factory occurs smoothly and all remaining customer orders are completed, the entity needs to retain some employees until closure of the factory in nine months. As a result, the entity announced that employees who agree to stay until the closing of the factory shall receive P80,000 payment at the end of nine months in addition to receiving their current wage throughout the period of closure instead of the P30,000.
At the beginning of current year, Zamba Company announced the decision to close the factory located in Zamboanga and terminate all 150 employees as a result of economic downturn. The entity shall pay P30,000 per employee upon termination. However, to ensure that the windup of the factory occurs smoothly and all remaining customer orders are completed, the entity needs to retain some employees until closure of the factory in nine months. As a result, the entity announced that employees who agree to stay until the closing of the factory shall receive P80,000 payment at the end of nine months in addition to receiving their current wage throughout the period of closure instead of the P30,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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REQUIRED:
12. Compute the total benefit under the termination plan.
Transcribed Image Text:D. At the beginning of current year, Zamba Company announced the decision to close the factory located in
Zamboanga and terminate all 150 employees as a result of economic downturn.
The entity shall pay P30,000 per employee upon termination.
However, to ensure that the windup of the factory occurs smoothly and all remaining customer orders are
completed, the entity needs to retain some employees until closure of the factory in nine months.
As a result, the entity announced that employees who agree to stay until the closing of the factory shall
receive P80,000 payment at the end of nine months in addition to receiving their current wage throughout
the period of closure instead of the P30,000.
Based on this offer, the entity expected to retain 20 employees until the factory is closed.
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