Coco pays on average three weeks vacation pay, even though Cocos legal obligation is only for two weeks. This vacation pay accumulates and can be carried over for up to one year. However, if the employee leaves before the vacation is taken, then they are only legally entitled to the two week rate. At the end of 2022, there were 10 non-manager employees who had only taken one week of their annual entitlement during 2022. There is a probability of 15% that one of these employees will leave before the full vacation accrual is taken.

What are the financial reporting issues from the above.