Assume the Abercrombie & Fitch $10-$K report contains the following footnote relating to its leasing activities. This is the only information it discloses relating to its leasing activity.

At January $28,2017,$ the Company was committed to non$-$cancelable leases with remaining terms of one to $15$ years. A summary of operating lease commitments under non$-$cancelable leases follows $($thousands$)$:

Assuming that its operating leases relate to real estate, and that A&F depreciated such assets on a straight$-$line basis with no salvage value and useful life of $8$ years, estimate the effect on the company's $2006$ income before tax of capitalizing these operating leases. Use a $7\%$ discount rate and round the remaining lease life to the nearest whole year.

Select one:

A$.$

Increase income before taxes by $$187,674,000$

B$.$

Reduce income before taxes by $$10,585,000$

C$.$

Reduce income before taxes by $$187,674,000$

D$.$

Reduce income before taxes by $$198,259,000$