Meadow Ltd plans to close a factory in 10 months' time, when it will terminate the employment of all employees who remain at the factory. Meadow Ltd requires the services of the employees at the factory to fulfil its contractual obligations and so the terms of the plan of termination are as follows: Each employee who continues to provide services until the factory closure will receive a cash payment of $40 000 on the termination date. Each employee who leaves before the closure of the factory will receive a cash payment of $15 000. . At the date the termination plan is announced, there are 120 employees at the factory and only 20 employees are expected to leave before the factory's closure. Required Explain how the benefits from the plan of termination would be accounted for by Meadow Ltd in accordance with the requirements of AASB 119.

Meadow Ltd plans to close a factory in 10 months' time, when it will terminate the employment of all employees who remain at the factory. Meadow Ltd requires the services of the employees at the factory to fulfil its contractual obligations and so the terms of the plan of termination are as follows: Each employee who continues to provide services until the factory closure will receive a cash payment of $40 000 on the termination date. Each employee who leaves before the closure of the factory will receive a cash payment of $15 000. . At the date the termination plan is announced, there are 120 employees at the factory and only 20 employees are expected to leave before the factory's closure. Required Explain how the benefits from the plan of termination would be accounted for by Meadow Ltd in accordance with the requirements of AASB 119.

PAYROLL ACCT.,2019 ED.(LL)-TEXT

19th Edition

ISBN:9781337619783

Author:BIEG

Publisher:BIEG

Chapter4: Income Tax Withholding

Section: Chapter Questions

Problem 6SSQ

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An entity is committed to close a factory in 10 months and shall terminate the employment of all the remaining employees of the factory. Under the termination plan, an employee leaving before closure of factory shall receive on termination date a cash payment of P20,000. However, an employee that renders service until closure of the factory shall receive P60,000. There are 120 employees at the factory. The entity expects 100 employees to leave before closure and 20 employees to render service until closure. REQuIRED: What amount should be recognized as termination benefit and amount should be recognized as short-term benefit?
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