Masters Ltd Has Three Employees Who Are Entitled to Long-Service

Masters Ltd has three employees who are entitled to long-service leave (LSL) .The LSL can be taken after 15 years of service,at which time the employee is entitled to 13 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.
$$\begin{array} { | c | r | c | r | } \hline \begin{array} { c } \text { No. of } \\\text { employees }\end{array} & \begin{array} { c } \text { Current salary } \\\text { per employee }\end{array} & \begin{array} { c } \text { Years of } \\\text { service }\end{array} & \begin{array} { c } \text { Probability \% that } \\\text { LSL will be paid }\end{array} \\\hline 1 & 90000 & 4 & 25 \\\hline 1 & 60000 & 7 & 85 \\\hline 1 & 80000 & 11 & 100 \\\hline\end{array}$$
Other information collected:
$$\begin{array} { | c | r | r | } \hline \begin{array} { c } \text { Periods to } \\\text { maturity }\end{array} & \begin{array} { c } \text { Corporate } \\\text { bond rate (\%) }\end{array} & \begin{array} { c } \text { Risk-adjusted discount } \\\text { rate for Masters Ltd (\%) }\end{array} \\\hline 9 & 6.00 & 8.00 \\\hline 6 & 5.25 & 6.50 \\\hline 3 & 4.75 & 5.75 \\\hline 2 & 3.50 & 4.50 \\\hline\end{array}$$
The inflation rate for the foreseeable future is 3.5%.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 $20 561,what is the LSL expense for the current period (round amounts to the nearest dollar) ?

A) $1202
B) $948
C) $1064
D) $21 763