Sydney Bay Ltd has five employees. According to their particular employment award, long-service leave can be taken after 12 years, at which time the employee is entitled to 10 weeks' leave. If an employee were to leave before the completion of 12 years' service, no entitlement would be paid. Name of employee Current salary ($) Years of service Years until LSL vests Black 40 000 2 10 White 40 000 4 Brown 50 000 6. 6 Green 60 000 4 Purple 70 000 10 High-quality corporate bond rates exist with periods to maturity that exactly match the various periods that must still be served by the employees before LSL entitlements vest with them. Corporate bond period to maturity Bond rate (%) 10 8.0 7.0 6. 6.5 4 6.0 2 5.8 The projected inflation rate for the foreseeable future is 2 per cent. The projected probabilities that the employees will stay long enough for the LSL to vest-that is, for a total of 12 years-are as follows: Name Probability (%) that LSL will vest Black 15 White 20 Brown 50 Green 70 Purple 90 REQUIRED 1. Calculate Sydney Bay's current obligation for long-service leave. 2. If the opening provision for long-service leave is $12 500, provide the journal entry to record Alexandra Bay's long-service leave expense.

Sydney Bay Ltd has five employees. According to their particular employment award, long-service leave can be taken after 12 years, at which time the employee is entitled to 10 weeks' leave. If an employee were to leave before the completion of 12 years' service, no entitlement would be paid. Name of employee Current salary ($) Years of service Years until LSL vests Black 40 000 2 10 White 40 000 4 Brown 50 000 6. 6 Green 60 000 4 Purple 70 000 10 High-quality corporate bond rates exist with periods to maturity that exactly match the various periods that must still be served by the employees before LSL entitlements vest with them. Corporate bond period to maturity Bond rate (%) 10 8.0 7.0 6. 6.5 4 6.0 2 5.8 The projected inflation rate for the foreseeable future is 2 per cent. The projected probabilities that the employees will stay long enough for the LSL to vest-that is, for a total of 12 years-are as follows: Name Probability (%) that LSL will vest Black 15 White 20 Brown 50 Green 70 Purple 90 REQUIRED 1. Calculate Sydney Bay's current obligation for long-service leave. 2. If the opening provision for long-service leave is $12 500, provide the journal entry to record Alexandra Bay's long-service leave expense.

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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