On January 1, 2021, Lang Corporation leased a ship from Fort Company for an eight- year period expiring December 30, 2029. Equal annual payments of $500,000 are due on January 1 of each year, beginning with January 1, 2021. The lease is properly classified as a finance lease on Lang 's books. The present value on January 1, 2021 of the eight lease payments over the lease term discounted at 10% is $2,934,213. Assuming all payments are made on time, the amount that should be reported by Lang Corporation as the interest expense for this lease for 2021 was a) $500,000. b) $217,763. c) $293,421. d) $243,421.
On January 1, 2021, Lang Corporation leased a ship from Fort Company for an eight- year period expiring December 30, 2029. Equal annual payments of $500,000 are due on January 1 of each year, beginning with January 1, 2021. The lease is properly classified as a finance lease on Lang 's books. The present value on January 1, 2021 of the eight lease payments over the lease term discounted at 10% is $2,934,213. Assuming all payments are made on time, the amount that should be reported by Lang Corporation as the interest expense for this lease for 2021 was a) $500,000. b) $217,763. c) $293,421. d) $243,421.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![On January 1, 2021, Lang Corporation leased a ship from Fort Company for an eight-
year period expiring December 30, 2029. Equal annual payments of $500,000 are
due on January 1 of each year, beginning with January 1, 2021. The lease is properly
classified as a finance lease on Lang 's books. The present value on January 1, 2021
of the eight lease payments over the lease term discounted at 10% is $2,934,213.
Assuming all payments are made on time, the amount that should be reported by
Lang Corporation as the interest expense for this lease for 2021 was
О
a) $500,000.
b) $217,763.
c) $293,421.
d) $243,421.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4a4f22cf-ab09-4afa-971f-e8a5f5aba9e5%2F3cc8b98c-69ac-44e8-948b-cb1d5fdd6643%2Fx7w1qqf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On January 1, 2021, Lang Corporation leased a ship from Fort Company for an eight-
year period expiring December 30, 2029. Equal annual payments of $500,000 are
due on January 1 of each year, beginning with January 1, 2021. The lease is properly
classified as a finance lease on Lang 's books. The present value on January 1, 2021
of the eight lease payments over the lease term discounted at 10% is $2,934,213.
Assuming all payments are made on time, the amount that should be reported by
Lang Corporation as the interest expense for this lease for 2021 was
О
a) $500,000.
b) $217,763.
c) $293,421.
d) $243,421.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 1 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education