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ROSA COMMENCED A LONG TERM BENEFIT BONUS SCHEME FOR EMPLOYEES AT 1 MAT 2010 UNDER THE SCHEME EMPLOYEE RECEIVE A CUMULATIVE BONUS ON THE COMPLETION OF 5 YEARS SERVICES. THE BONUS IS 2 % OF THE TOTAL OF THE ANNUAL SALARY OF THE EMPLOYEE. THE TOTAL SALARY OF THE EMPLOYEE FOR THE YEAR TO 30 APRIL 2011 WAS 40 MILLION AND A DISCOUNT RATE OF 8% IS ASSUMED ADDITIONALLY AT 30 APRIL 2011 . IT IS ASSUMED THAT ALL EMPLOYEES WILL RECEIVE THE BONUS AND THAT SALARIES WILL RISE 5% PER YEAR
SHOW HOW THIS LONG TERM BONUS SHOULD BE ACCOUNTED IN FINANCIAL STATMENT FOR THE YEAR ENDED 30 APRIL 2011?
SIR KINDLY SOLVE THIS WITH EXPLAINATION
Isn’t this a copy of a question included within the free course notes available on this site?
When you reply to this question of mine, please don’t use upper case font 🙂
Is the answer 800,000 discounted for 4 years at the rate of 1/1.08?
Expense in statement of profit or loss, Liability in statement of financial position
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