Australia Ltds directors decided on $1$ April $2024$ to restructure the companys operations as follows.

Plant Alpha would be closed down and put on the market for sale.

$1000$ employees working in Plant Alpha would be retrenched on $30$ June $2024,$ and would be paid their accumulated entitlements plus $3$ months wages.

The remaining $500$ employees working in Plant Alpha would be transferred to Plant Beta, which would continue operating.

Five head$-$office staff would be retrenched on $15$ May $2024,$ and would be paid their accumulated entitlements plus $3$ months wages.

As at the end of Australia Ltds reporting period, $30$ June $2024,$ the following transactions and events had occurred.

Plant Alpha was shut down on $1$ June $2024.$ An offer of $$100$ million had been received for Plant Alpha and there is a binding sales agreement.

The $200$ retrenched employees had left and their accumulated entitlements had been paid. However, an amount of $$5$ million, representing a portion of the $3$ months wages for the retrenched employees, had still not been paid.

Costs of $$1$ million were expected to be incurred in transferring the $500$ employees to their new work in Plant Beta. The transfer is planned for $1$ July $2024.$

$10$ of the $11$ head$-$office staff who have been retrenched have had their accumulated entitlements paid, including the $3$ months wages. However, one employee, Nokomoto, remains in order to complete administrative tasks relating to the closure of Plant Alpha and the transfer of staff to Plant Beta.

Nokomoto is expected to stay until $31$ July $2024.$ His salary for July will be $$15,000$ and his retrenchment package will be $$45,000,$ all of which will be paid on the day he leaves. He estimates that he would spend $40\%$ of his time administering the closure of Plant Alpha, $40\%$ on administering the transfer of staff to Plant Beta, and the remaining $20\%$ on general administration.

Please explain based on AASB and calculate and journalize the restructuring provisions to be recognised as at $30$ June $2024.$

Answer rating: 100% (QA)

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