Newfoundland University recently signed a contract with the bargaining unit that represents full-time professors. The contract agreement starts on April 1, 2019, the start of the university's fiscal year. The following excerpt outlines the portion of the signed agreement that relates to sabbaticals: “Professors may apply for a one-year sabbatical leave after seven continuous years of employment and must outline how their sabbatical plans will benefit the university.” 

After completing the required amount of time, any professor may apply for the leave. The contract notes particular types of activities that the sabbatical is intended to promote, including formal research, continued professional development, and independent study and research. Professors are left to make their own choices regarding which of these activities to pursue while on sabbatical leave. As part of their agreement, they must continue to work for the university one year after their sabbatical or reimburse it for funds they receive while on leave. The agreement states that professors receive 80% of their salary while on sabbatical leave. Professors may delay, or be asked to delay, their application for sabbatical, in which case they will receive 85% of their salary while on leave. 

The issue of sabbaticals had long been a point of contention with faculty at Newfoundland University, and they fought vehemently for the right to this paid leave, which had not previously been in their collective agreement. The university is phasing in the unfunded sabbatical plan gradually, which means that the first professors will be eligible to apply for their sabbaticals in seven years. 

The controller has put together the following numbers of professors in each salary group: 

Professors with salaries averaging $80,000............55 

Professors with salaries averaging $90,000............40 

Professors with salaries averaging $110,000..........10 

The union agreement calls for a salary increase of 2% per year in each of the next seven years. This is consistent with past union agreements for this bargaining unit. Five of the professors with salaries averaging $110,000 are scheduled to retire in four years. The university expects to keep a similar composition of salaried professors in the future. Assume a discount rate of 6%. Assume that Newfoundland University is a private university that applies ASPE. 

Instructions 

a. Prepare any entries that are required at the March 31, 2020 fiscal year end assuming sabbaticals will be granted only if the sabbatical activities proposed by the applicants are expected to benefit the university in some way. 

b. Prepare any entries that are required at the March 31, 2020 fiscal year end assuming sabbaticals will be granted automatically with no restrictions on the professors' activities during the year. Use a financial calculator or Excel function for your calculations and round your answer to the nearest dollar. 

c. Five faculty members are granted approval to take sabbatical in the first year that they are eligible under the assumption in part (b). Prepare the entry that will be required when the professors are paid, assuming that an amount of $367,000 has correctly been accrued for these employees. 

d. The contract allows employees of the bargaining unit to take up to 10 days of paid sick leave per year. Explain the accounting implications under the following assumptions: 

1. The sick leave can to be carried over for up to a one-year period following year end. 

2. Any unused sick time is not eligible to be carried over to the following fiscal period.