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Hi,
Do you have a copy of a BPP course notes. If yes can I get some assistance with the question in the subject matter above. I’m really confused.
Hi
No, I don’t have BPP course notes. In fact, I don’t have any BPP material at all!
See if you can summarise the problem and then get back to me
Question
The salaried employees of an entity are entitled to 20days paid leave each year. the entitlement accrues evvenly over the year and unused leave may be carried forward for one year. The holiday year is the same as the financial year. At 31 Dec 20X4, the entity had 2200 salaried emlpoyees and the average unused holiday entitlement was 4days per employee. Approximately 6% of employees leave without taking their entitlement and there is no cash payment when an employee leaves in respect of holiday entitlement. There re 255 working days in the year and the total annual salary cost is $42M. No adjustment has been made in the FS for the above and there was no opening accrual required for holiday entitlement.
Required: Discuss with suitable computations, how the leave that may be carried forward is treated in the FS for the year ended 31.12.20X4.
4 x 2,200 x 94% x 42m / 255
Days x Employees x Employees remaining x Annual cost / working days in a year
Without a calculator, my mental arithmetic tells me that that’s an amount of $136,245
Dr Employee costs in statement of profit or loss $136,245
Cr Current liabilities $136,245Ok?
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