1. long service leave Hood Ltd providE its employees with 13 weeks long-service leave for 1i]I years of service. Assume there is no entitlement until 1i]I years of service is reached. At reporting date, Hood Ltd has 10 employees who have been with the company for 6 years and each employee earns 5100 {Kill per annum. Hood Ltd Illculates that 1here is an Ellie probability that each employee will maintain their employment with the Company until their longservice leave entitlement vests. The projected ination rate is 3% pa. and it is expected that wage increasE will keep pace with ination. The corporate bond rate for an issue wi'1 4 years to maturity is 5% while for an issue wilh E years to maturity the rate is 3%. Future Value and Present Value Table [Extract] REQUIRED Calculate the provision for long service leave at reporting date of Hood Ltd. What is iournal entry if the trial balance currently shows he provision at an amount of $521 '? 2. Sick leave On 1 January 20X1, Jol Ltd commenced operations in the childcare industry. Jol Ltd's annual payroll is $2.6 million. The sick leave entitlement of each employee is two weeks per year. Each employee receives the same annual salary. The entitlements to sick leave are accumulating but non-vesting. During the 20X1 year, 40% of employees used their full entitlement to sick leave and 60% used none of their entitlement. Jol Ltd expects that one half of the sick leave that has accumulated by 31 December 20X1 will be used up in subsequent periods. REQUIRED (a) Prepare Jol Ltd's journal entries for sick leave for the year to 31 December 20X1. (b) Prepare journal entries assuming that sick leave is non-vesting and non-cumulative. (c) Prepare journal entries assuming that sick leave is vesting and cumulative.Year Profits Investment Shipping + Annual debit Reported [losses) income Investment or (credit] to Net Profit from (S'000s) Income($'000s) Provision for (S'0005) shipping Ship (S'0005) Modernisation ($'0005) A A + B C A+ B+C 2009 900 500 1400 565) 337 2010 780 452 328 995 668 2011 450 135 (15) 740 725 2012 380 422 42 736 779 2013 425 104 21 794 773 2014 538 261 (277 1008 731 2015 540 267 (273 901 629 2016 1334 559 225 513 737 2017 95) 452 357 372 729 2018 427 385 (42] 194 152 Each year, the reported Net Profit equals the sum of shipping profit (or loss), investment income and the debit or credit to Provision for Ship Modernisation. You are concerned that the shipping operations (the company's core business) have been unprofitable for all but one of the past 10 years, and that these losses have been made up each year by investment income (the company has a large investment portfolio). The sum of shipping and investment income varies a lot, being negative in six and positive in four of the past 10 years. Reported Net Profit on the other hand, is always positive, although it is not a smoothly increasing series of numbers, and indeed in 2018 has declined sharply. Puzzled by the account Provision for Ship Modernisation, you make enquiries and find that this account had been created and built up in the late 1990s and early 2000s when the company had several lucrative shipping contracts with the Australian government and profits on those contracts were very high. Those contracts have now ceased. In order to counter accusations that the company was earning excessive profits, each year in the late 1990s/early 2000s, an accrual debit to a Ship Modernisation expense account was created with the corresponding credit to Provision for Ship Modernisation account. The latter has appeared in the balance sheet as a noncurrent liability for many years. In 2009, the account had a credit balance built up of $5,400,000. Ship modernisations are a major activity involving large outlays but are not essential if ships are well maintained. Ship Ahoy's vessels are very well maintained. Up to 2018, none of the company's fleet has ever actually been modemised and the company has no immediate plans to modernise any ship. The company's key executives are paid annual bonuses if the company reports a net profit, but no bonus is paid if a loss is reported.Required: (a) Comment on the legitimacy of the Provision for Ship Modernisation Account from the viewpoint of AASB 137 Provisions. (b) Has the company engaged in earnings management over the last 10 years? (c) Comment on the use made of the Provision for Ship Modernisation Account from a Positive Accounting Theory perspective. (d) Comment from an Aristotelian ethical perspective on the legitimacy of the Provision for Ship Modernisation Account and the use made of it over the past 10 years. (e) Comment from a Utilitarian ethical perspective on the legitimacy of the Provision for Ship Modernisation Account and the use made of it over the past 10 years. Acknowledgement: This case is adapted from the Royal Mail Steam Packet Company case (R vs Kylsant 1931). For simplicity, the currency is now in dollars, some terminology and the nature of the Provision have been changed, and the years updated to the present. The contractual incentives (bonuses) did not appear in the original case. Data are from Johnson, Jager & Taylor The Law and Practice of Company Accounting 5thed 1983, p. 32)3. Ethics case with Provisions You are the newly appointed deputy chief accountant at Ship Ahoy Shipping Co Ltd. You review the company's accounts for the past 10 years, and you observe the following data