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Question 5: Sydney Bay Ltd has five employees. According to their particular employment award, long-service leave can be taken after 12 years, at which time
Question 5: Sydney Bay Ltd has five employees. According to their particular employment award, long-service leave can be taken after 12 years, at which time the employee is entitled to 10 weeks' leave. If an employee were to leave before the completion of 12 years' service, no entitlement would be paid. Years of service Years until LSL vests Name of employee Black White Brown Green Purple Current salary (5) 40 000 40 000 50 000 60 000 70 000 High-quality corporate bond rates exist with periods to maturity that exactly match the various periods that must still be served by the employees before LSL entitlements vest with them. Corporate bond period to maturity 10 Bond rate (%) 8.0 7.0 6.0 5.8 The projected inflation rate for the foreseeable future is 2 per cent. The projected probabilities that the employees will stay long enough for the LSL to vest--that is, for a total of 12 years-are as follows: Probability (%) that LSL will vest Name Black White Brown Green Purple REQUIRED 1. Calculate Sydney Bay's current obligation for long-service leave. 2. If the opening provision for long-service leave is $12 500, provide the journal entry to record Alexandra Bay's long-service leave expense
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