Bombay Instruments Corp. has 50 employees, who are each entitled to ten working days' non- vesting...
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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)
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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:
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