Fleetwood Ltd commenced operations on 1 July 2020 and had 420 employees. Average salaries were $70,000 per annum for the year. Fleetwood Ltd accounts for all recognised employee costs as expenses. Employees are entitled to 13 weeks of long service leave after 10 years of employment. The following information is based on advice received from actuarial consultants at 30 June 2021. Number of years unit credit 1 year Number of years until long service leave is expected to be paid Руears Probability that Jong service leave will be taken 30% Expected increase in salaries (based on inflation) 1.5% Yield on 9-year high quality corporate bonds at 30/06/2021 10% Projected $1 salary over 9 years at 1.5% inflation rate 1.1434 Present value of $1 lump sum in 9 years at 10% 0.4241 Required Determine the obligation for long service leave at 30 June 2021, applying the projected unit credit method in accordance with AASB 119/IAS 19, and prepare the journal entry to account for changes in the provision for long service leave.
Fleetwood Ltd commenced operations on 1 July 2020 and had 420 employees. Average salaries were $70,000 per annum for the year. Fleetwood Ltd accounts for all recognised employee costs as expenses. Employees are entitled to 13 weeks of long service leave after 10 years of employment. The following information is based on advice received from actuarial consultants at 30 June 2021. Number of years unit credit 1 year Number of years until long service leave is expected to be paid Руears Probability that Jong service leave will be taken 30% Expected increase in salaries (based on inflation) 1.5% Yield on 9-year high quality corporate bonds at 30/06/2021 10% Projected $1 salary over 9 years at 1.5% inflation rate 1.1434 Present value of $1 lump sum in 9 years at 10% 0.4241 Required Determine the obligation for long service leave at 30 June 2021, applying the projected unit credit method in accordance with AASB 119/IAS 19, and prepare the journal entry to account for changes in the provision for long service leave.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Fleetwood Ltd commenced operations on 1 July 2020 and had 420 employees. Average salaries were $70,000 per annum for
the year. Fleetwood Ltd accounts for all recognised employee costs as expenses. Employees are entitled to 13 weeks of long
service leave after 10 years of employment.
The following information is based on advice received from actuarial consultants at 30 June 2021.
Number of years unit credit
Number of years until long service leave is expected to be paid
1 year
Руears
Probability that long service leave will be taken
30%
Expected increase in salaries (based on inflation)
1.5%
Yield on 9-year high quality corporate bonds at 30/06/2021
10%
Projected $1 salary over 9 years at 1.5% inflation rate
1.1434
Present value of $1 lump sum in 9 years at 10%
0.4241
Required
Determine the obligation for long service leave at 30 June 2021, applying the projected unit credit method in
accordance with AASB 119/IAS 19, and prepare the journal entry to account for changes in the provision for long
service leave.
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