Question
Bluebell plc provides credit services. Bluebell plc provides the employees with long service leave entitlements of 13 weeks of paid leave for every 10 years
Bluebell plc provides credit services. Bluebell plc provides the employees with long
service leave entitlements of 13 weeks of paid leave for every 10 years of continuous
service. As the company has been operating for only 5 years, no employees have
become entitled to long service leave. However, the company recognises a provision for
long service leave using the projected unit credit approach required by IAS 19. The
following information is obtained from Bluebell plc payroll records and actuarial reports
for the non-managerial staff of its debt collection business at 31 December 2016:
Additional information
(a) The estimated annual increase in retail wages is 5% p.a. for the next 10 years,
reflecting Bluebell plc's policy of increasing salaries of its debt collection staff for each
year of additional experience.
(b) At 31 December 2015, the provision for long service leave for non-managerial debt
collection staff was 132 000.
Required
Prepare the journal entry to account for Bluebell plc's provision for long service leave at
31 December 2016
in relation to the non-managerial employees of the company's debt collection business.
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