On January 1, 2018, Lessee Corporation entered into a ten-year lease. Lessee follows ASC 840 guidance for lease accounting. The lease terms required annual year-end payments of $160,000. The lease agreement does not contain either a bargain purchase option or a transfer of title. The fair value of the equipment at the inception of the lease was $1,100,000; estimated life of the leased assets was fourteen years. Lessee Corporations incremental borrowing rate was 10%; the implicit rate of interest, known to the lessee, was 12%. Applicable time value of money values are as follows:

Ten-year, 10% ordinary annuity 6.144

Ten-year, 12% ordinary annuity 5.650

Ten-year, 10% annuity due 6.759

Ten-year, 12% annuity due 6.328

Lessee Corporation should initially capitalize the lease at what amount?

A. $0, the lease should not be capitalized

B. $1,081,440

C. $983,040

D. $904,000