On December 31, 2008, Mendez, Inc. leased machinery with a fair value of $840,000 from Cey Rentals Co. The agreement is a six-year noncancelable lease requiring annual payments of $140,000 beginning December 31, 2008. The lease is appropriately accounted for by Mendez as a capital lease. Mendez's incremental borrowing rate is 11% Mendez knows the interest rate implicit in the lease payments is 9%. The present value of an annuity due of 1 for 6 years at 11% is 4.6959. The present value of an annuity due of 1 for 6 years at 9% is 4.8896 Required: Determine the amount of lease liability that Mendez should report in its December 31, 2008 balance sheet