Reference no: EM132801846
Question - The employees of a New South Wales company are entitled to 9 weeks' long service leave after 10 years' continuous service. The following information has been compiled for calculating the liability for long-service leave as at 30 June 2020.
Years of service @ 30 June 2020
2
7
9
Number of employees @ 30 June 2020
15
80
30
Aggregate annual salaries for 2019/2020
$ 1,155,000
$ 12,400,000
$ 6,150000
Aggregate projected annual salaries when leave is due
$ 2,310,000
$ 18,600,000
$ 6,273,000
Probability of becoming unconditionally entitled to LSL
0.20
0.65
0.95
The long-service leave liability reported for the year-ended 30 June 2019 was $1,800,000. The following government bond rates have been identified.
Period to Maturity (years) Government Bond rate (%)
1 1.0
3 2.0
8 6.0
REQUIRED -
i) Calculate the Long service liability as 30 June 2020.
ii) Prepare the general journal entry in the books of the company for the year ended 30 June 2020 to provide for long-service leave for its employees in accordance with the requirements of AASB 119.