1). Whalen, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2020.

January 1, 2020 December 31, 20208

Fair value of pension plan assets $5,600,000 $6,000,000

Projected benefit obligation 6,400,000 6,880,000

Accumulated benefit obligation 1,120,000 1,360,000

Accumulated OCI (Gains / Losses) -0- (120,000)

The service cost component of pension expense for 2020 is $600,000 and the amortization of prior service cost due to an increase in benefits is $80,000. The settlement rate is 10% and the expected rate of return is 9%. What is the amount of pension expense for 2020?

$696,000

$816,000

$600,000

$828,000

2). On December 31, 2020, Lansing, Inc. leased machinery with a fair value of $1,575,000 from Dalton Rentals Co. The agreement is a six-year noncancelable lease requiring annual payments of $300,000 beginning December 31, 2020. The lease is appropriately accounted for by Lansing as a finance lease. Lansingss incremental borrowing rate is 11%. Lansing knows the interest rate implicit in the lease payments is 10%.

The present value of an annuity due of 1 for 6 years at 10% is 4.7908.

The present value of an annuity due of 1 for 6 years at 11% is 4.6959.

In its December 31, 2020 balance sheet, Lansing should report a lease liability of

$1,437,240

$1,408,770

$1,275,000

$1,137,240