Chapter 21 Additional Practice1.On December 31, 2011, Lang Corporation leased a ship from Fort Company for a ten-year period expiring December 30, 2019. Equal annual payments of $400,000 are due on December 31 of each year, beginning with December 31, 2011. The lease is properly classified as a capital lease on Lang 's books. The present value at December 31, 2011 of the ten lease payments over the lease term discounted at 7% is $3,006,093. a.Assuming all payments are made on time, what amount should Lang report as the total obligation under capital leases on its December 31, 2012 balance sheet? b.In 2013, what amount Lang should report as interest expense on its 2013 income statement? 2.On January 1, 2011, Ogleby Corporation signed a five-year noncancelable lease for equipment. The terms of the lease called for Ogleby to make annual payments of $60,000 at the end of each year for five years with title to pass to Ogleby at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Ogleby uses the double-declining balance method of depreciation for all of its fixed assets. Ogleby
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