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12. On January 1, Year 1, Fletcher Co, signed a long-term lease for an office building. The term of the lease required Fletcher to pay
12. On January 1, Year 1, Fletcher Co, signed a long-term lease for an office building. The term of the lease required Fletcher to pay $20,000 annually, beginning December 31, Year 1, and continuing each year for 5 years. The lease qualifies as a finance lease. On January 1, Year 1, the present value of the lease payments is $140,000 at the 9% interest rate implicit in the lease. What amount should Fletcher report as a lease liability on December 31, Year 1? a. $120,000 b. $111,500 c. $127,400 d. $132,600
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