Clary Instruments enters into an agreement with Fabian Industries on January 1, 2019, to lease a machine that it will iase in its manufacturing operations. The following data pertain to the agreement: (a) The term of the nencancelable lease is 3 years with no renewal option. Payments of
$287.432
are due on January 1 of eachyear beginning on January 1, 2019 . (b) The fair value of the machine on January 1, 2019, is
$900,000
. The machine has a remaining economic ife of 10 years, with no talvage value. The machine reverts to the lessoc upon the termination of the lease (c) Clary depreciates all machinery it owns on a straisht-line basis. (d) Clary's incremental borrowing rate is
10%
per year. Clary does nat have knowleded of the ay implicit rate used by Fablan If the present value of the future lease pwoments is
$800.000
at Jankary 1,2019 , what is the amount of the reduction in the lease. liability for Clary Instruments in the second tullyear of the lease if Clary accounts for the lease as a finance lease? nearest dollar)
$223.426
$207.426
$228,175
$236,175
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