QUESTION 1 15 MARKS Cellcom Ltd is a telecommunication company listed on the Namibian Stock Exchange (NSX). Cellcom Ltd believes that the most important asset of an organisation is its employees. Cellcom Ltd therefore has a competitively structure employee remuneration which includes various benefits.

The following table relates to employees for the year ended 31 December 2021:

Employee Category Annual gross salary per employee Number of employees

Directors N$ 550 000 6

Administrators N$ 340 000 15

Technicians N$ 280 000 25

Vacation leave:

The company policy is that all vacation leave is accumulating for 1 year but is non

vesting and the leave that may be carried forward is limited.

It is expected that only half of the directors will use the past leave due to them and the administrators and technicians still employed in 2022 financial year will use 75%.

3 administrators and 1 technician are expected to resign from 2 January 2022.

Assume 250 working days in a year.

Employee Category Maximum leave days allowed per year Maximum leave days allowed to carry forward Leave days taken in current year earned in current year Directors 14 7 5

Administrators 20 10 15

Technicians 25 12 22

Bonuses:

Every year Cellcom Ltd pays out 5% (directors 1%; administrators 2%; technicians 2%) of their profit to its employees. The profit is distributed to the employees in February each year.

The only condition is the employee still had to be employed at Cellcom Ltd at the time of distribution. If an employee is no longer employed at the time of distribution, he forfeits his share of the profit. The forfeited profit is not distributed amongst the other employees.

The profit for the year ended 31 December 2021 was N$ 3 800 000.

REQUIRED: (a) Calculate the employee benefit expense amount to be disclosed in the statement of comprehensive income for the 2021 financial year. 15