On December 31, 2011, Lang Corporation Leased a Ship from Fort

question 61

Multiple Choice

On December 31, 2011, Lang Corporation leased a ship from Fort Company for an eight-year period expiring December 30, 2019.Equal annual payments of $200,000 are due on December 31 of each year, beginning with December 31, 2011.The lease is properly classified as a finance lease on Lang 's books.The present value at December 31, 2011 of the eight lease payments over the lease term discounted at 10% is $1,173,685.Assuming all payments are made on time, the amount that should be reported by Lang Corporation as the total lease liability on its December 31, 2012 statement of financial position.

• A)$1,091,054.
• B)$1,000,159.
• C)$871,054.
• D)$1,200,000.

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Definitions:

Board of Directors

A group of individuals elected by shareholders to oversee the major decisions and policies of a corporation.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation, entitling the owner to a proportion of the company's assets and profits.

Preemptive Rights

Rights given to existing shareholders to purchase additional shares in a company during a new issue before the shares are offered to the public, allowing shareholders to maintain their proportional ownership.

Stockholders

Individuals or entities that own one or more shares of stock in a corporation, making them partial owners of that company.