Midrift Ltd has nine employees who are entitled to long-service leave (LSL).The LSL can be taken after 12 years of service,at which time the employee is entitled to 15 weeks' leave.After 10 years the employee is entitled to a pro rata cash payment on leaving the company.Information about the employees is set out below.

\begin{array} { | c | r | c | r | } \hline \begin{array} { c } \text { No. of } \\\text { employees }\end{array} & \begin{array} { c } \text { Current salary } \\\text { per employee }\end{array} & \begin{array} { c } \text { Years of } \\\text { service }\end{array} & \begin{array} { c } \text { Probability \% that } \\\text { LSL will be paid }\end{array} \\\hline 3 & 50000 & 6 & 45 \\\hline 3 & 65000 & 8 & 80 \\\hline 3 & 70000 & 11 & 100 \\\hline\end{array}

Other information collected:

\begin{array} { | c | r | r | } \hline \begin{array} { c } \text { Periods to } \\\text { maturity }\end{array} & \begin{array} { c } \text { Corporate } \\\text { bond rate (\%) }\end{array} & \begin{array} { c } \text { Risk-adjusted discount } \\\text { rate for Midrift Ltd (\%) }\end{array} \\\hline 6 & 8.50 & 9.00 \\\hline 4 & 7.25 & 8.50 \\\hline 2 & 5.75 & 6.75 \\\hline\end{array}

The inflation rate for the foreseeable future is 1.5%.The future salaries of the employees are expected to keep pace with inflation but not increase as a result of promotion.If the opening balance of the LSL provision is $87 560 what is the entry to record LSL expense for the current period (round amounts to the nearest dollar)?
A)

\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & \text { Long-service leave expense } & 2547 & \\\hline \mathrm { Cr } & \text { Cash } & & 2547 \\\hline\end{array}

\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & \text { Long-service leave expense } & 3416 & \\\hline \mathrm { Cr } & \text { Provision for long-service leave } & & 3416 \\\hline\end{array}

\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & \text { Provision for long-service leave } & 5316 & \\\hline \mathrm { Cr } & \text { Long-service leave expense } & & 5316 \\\hline\end{array}

\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & \text { Long-service leave expense } & 2547 & \\\hline \mathrm { Cr } & \text { Provision for long-service leave } & & 2547 \\\hline\end{array}

A Defined Contribution Scheme

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