Bombay Instruments Corp. has 50 employees, who are each entitled to ten working days' non- vesting...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Bombay Instruments Corp. has 50 employees, who are each entitled to ten working days' non- vesting paid annual leave for each completed year in service. Assume that the salary cost for 2018 is R60 per day, and that the gross salary equals the cost-to-company. Unused paid annual leave may be carried forward for one calendar year. At 31 December 2018, the average unused entitlement is four days per employee. Based on past experience, the entity expects that # 36 employees will take ten days of paid annual leave in 2019, # 4 employees will resign during 2019 before taking their leave, # the remaining 10 employees will each take an average of 14 days' paid leave. Assume that there are no salary increases for 2019. Required: Calculate the accrual in the financial statements for annual paid leave entitlement if a) FIFO method (paid annual leave is first taken out of the previous year's entitlement and then out of the current year's entitlement) is used; b) LIFO method (paid annual leave is first taken out of the current year's entitlement and then out of the previous year's entitlement) is used. c) unused paid annual leave is a vesting benefit (leave to be paid in cash when employment is terminated) and may be carried forward indefinitely rather than for just one calendar year. (Introduction to IFRS, 2019) Bombay Instruments Corp. has 50 employees, who are each entitled to ten working days' non- vesting paid annual leave for each completed year in service. Assume that the salary cost for 2018 is R60 per day, and that the gross salary equals the cost-to-company. Unused paid annual leave may be carried forward for one calendar year. At 31 December 2018, the average unused entitlement is four days per employee. Based on past experience, the entity expects that # 36 employees will take ten days of paid annual leave in 2019, # 4 employees will resign during 2019 before taking their leave, # the remaining 10 employees will each take an average of 14 days' paid leave. Assume that there are no salary increases for 2019. Required: Calculate the accrual in the financial statements for annual paid leave entitlement if a) FIFO method (paid annual leave is first taken out of the previous year's entitlement and then out of the current year's entitlement) is used; b) LIFO method (paid annual leave is first taken out of the current year's entitlement and then out of the previous year's entitlement) is used. c) unused paid annual leave is a vesting benefit (leave to be paid in cash when employment is terminated) and may be carried forward indefinitely rather than for just one calendar year. (Introduction to IFRS, 2019)
Expert Answer:
Answer rating: 100% (QA)
a FIFO Method Accrual for Annual Paid Leave Entitlement 50 x 10 x R60 36 ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
Students also viewed these accounting questions
-
Alam Impian Berhad has one hundred employees who are each entitled to paid sick leave for a maximum period of one month. Unused sick leave cannot be carried forward to the next calendar period....
-
McFriend has 50 employees who are paid an average of $176 per day. The company allows 15 paid vacation days per year. Assume that McFriend Inc. has recorded a liability for compensated absences...
-
Co. A has 3,000 employees who are each entitled to 8 working days of paid sick leave for each year. Unused sick leave may be carried forward for 1 calendar year. Sick leave is taken first out of the...
-
a) Analysts attempt to value ordinary shares, in order to determine if market values are correct. Identify and describe the more common methods of valuation. Include a detailed explanation of the...
-
How is a business segment to be identified under the provisions of FASB Statement No. 131?
-
Solve problem and graph -4 5x + 6 < 21
-
What huge bankruptcy in 2001-2002 caused forensic accountants to become rising stars within the accounting profession?
-
Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2015, for $802,720 cash. At the acquisition date, Sierras total fair value, including the...
-
HSP Ltd. was founded 12 years ago. It has been profitable for the last 8 years, but it has needed all of its earnings to support growth and thus has never paid a dividend. Management has indicated...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
What is the unstretched length in DB? The weight of the crate is 50 kg and the spring constant is 200 N/m in DB. Use g= 9.81 m/s2.
-
What is the interest earned on $350 invested 4 years at a 5% simple interest?If I put $1500 into my savings account and earned $180 of interest at 4% simple interest, how long was my money in the...
-
The following information is available for Market, Incorporated and Supply, Incorporated at December 31: Accounts Accounts receivable Allowance for doubtful accounts Sales revenue Market,...
-
Develop a simulation of a Light Detector using Tinkercad. The LCD will display the INPUT 10- bit Value received from Photo resistor and OUTPUT 8-bit converted from Input 10-bit value. Red LED will be...
-
What happens when you change the data in a worksheet associated with a chart?
-
Find the solutions of the equation a cosh x b sinh x = c, assuming that a, b, and c are constants. [Hint: The result should have the form x = f(a,b,c), where f(a, b, c) is a specific function.] =
-
A firm is considering a rights offer. The company has determined that the ex-rights price will be $76. The current price is $90 per share, and there are 36 million shares outstanding. The rights...
-
Define the term utility software and give two examples.
-
What criteria should a company use to decide between alternative inventory cost flow assumptions? Evaluate the relevance of the LIFO cost flow assumption. Why is LIFO not allowed under international...
-
The Lord Company purchased a machine on January 2, 2007 for $70,000. The machine had an expected residual value of $10,000, an expected life of eight years or 24,000 hours, and a capacity to produce...
-
Samuel David wants to make five equal annual withdrawals of $8,000 from a fund that will earn interest at 10% compounded annually. Required How much would David have to invest on: 1. January 1, 2007...
-
If you are certain you could earn a 20 percent return on an investment in some other companys stock, what would you do? Explain your reasoning. Assume you own stock in a publicly traded company and...
-
What do you think might cause a company to reject a proposed capital project even though it promises a return significantly higher than the cost of capital?
-
Under what circumstances do you think a company might accept one capital project over another even though the project selected promises a lower return?
Study smarter with the SolutionInn App