Sky Ltd started operating on 1 July 2017 with 13 employees. 8 years later, all of those employees were still with the company. On 1 July 2019, the company hired 13 more people but by 30 June 2025, only 8 of those employed at the beginning of that year were still employed by Sky Ltd. All employees are entitled to 13 weeks long-service leave after a conditional period of 10 years of employment with the company. Below is the information available as of 30 June 2025: The aggregated annual salaries of all employees hired on 1 July 2017 is now $700,000. The aggregated annual salaries of all current employees hired on 1 July 2019 is now $600,000. Salaries are expected to increase indefinitely at 5% per annum. The probability that employees hired on 1 July 2017 will continue to be employed for the duration of the conditional period is 54%. The probability that employees hired on 1 July 2019 will continue to be employed for the duration of the conditional period is 46%. The opening balance of the provision for long-service leave was $6,000. The interest rates on high-quality corporate bonds are as follows: 1 July 2024 30 June 2025 4% 5% 7% 8% 8% 6% 9% 9% Maturing in 2 years Maturing in 3 years Maturing in 4 years Maturing in 5 years What is the long-service leave provision expense recognised as of 30 June 2025?
Sky Ltd started operating on 1 July 2017 with 13 employees. 8 years later, all of those employees were still with the company. On 1 July 2019, the company hired 13 more people but by 30 June 2025, only 8 of those employed at the beginning of that year were still employed by Sky Ltd. All employees are entitled to 13 weeks long-service leave after a conditional period of 10 years of employment with the company. Below is the information available as of 30 June 2025: The aggregated annual salaries of all employees hired on 1 July 2017 is now $700,000. The aggregated annual salaries of all current employees hired on 1 July 2019 is now $600,000. Salaries are expected to increase indefinitely at 5% per annum. The probability that employees hired on 1 July 2017 will continue to be employed for the duration of the conditional period is 54%. The probability that employees hired on 1 July 2019 will continue to be employed for the duration of the conditional period is 46%. The opening balance of the provision for long-service leave was $6,000. The interest rates on high-quality corporate bonds are as follows: 1 July 2024 30 June 2025 4% 5% 7% 8% 8% 6% 9% 9% Maturing in 2 years Maturing in 3 years Maturing in 4 years Maturing in 5 years What is the long-service leave provision expense recognised as of 30 June 2025?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sky Ltd started operating on 1 July 2017 with 13 employees. 8 years later, all of those employees were still with the company. On 1 July
2019, the company hired 13 more people but by 30 June 2025, only 8 of those employed at the beginning of that year were still employed
by Sky Ltd.
All employees are entitled to 13 weeks long-service leave after a conditional period of 10 years of employment with the company.
Below is the information available as of 30 June 2025:
• The aggregated annual salaries of all employees hired on 1 July 2017 is now $700,000.
• The aggregated annual salaries of all current employees hired on 1 July 2019 is now $600,000.
• Salaries are expected to increase indefinitely at 5% per annum.
• The probability that employees hired on 1 July 2017 will continue to be employed for the duration of the conditional period is 54%.
• The probability that employees hired on 1 July 2019 will continue to be employed for the duration of the conditional period is 46%.
• The opening balance of the provision for long-service leave was $6,000.
The interest rates on high-quality corporate bonds are as follows:
1 July 2024 30 June 2025
Maturing in 2 years
4%
5%
Maturing in 3 years
7%
8%
Maturing in 4 years
8%
6%
Maturing in 5 years
9%
9%
What is the long-service leave provision expense recognised as of 30 June 2025?
a. 220652
O b. 154933
O c. 109460
d. 69600
e. 103460
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