The employees of a New South Wales company are entitled to 9 weeks long service leave after

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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 @ Number of employees @ Aggregate annual Aggregate projected annual Probability of becoming unconditionally

30 June 2020 3 0 June 2020 salaries for 2019/2020 $ salaries when leave is due $ entitled to LSL

2 15 1,155,000 2,310,000 0.20

7 80 12,400,000 18,600,000 0.65

9 30 6,150000 6,273,000 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:

a) Calculate the Long service liability as 30 June 2020. (9 marks) [Answer and show workings here.

b) 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.