Pharoah Corporation enters into an agreement with Yates Rentals Co. on January 1, 2021 for the purpose of leasing a machine to be used in its manufacturing operations. The following data pertain to the agreement: (a) The term of the noncancelable lease is 3 years with no renewal option. Payments of $431148 are due on January 1 of each year. (b) The fair value of the machine on January 1,2021 , is $1200000. The machine has a remaining economic life of 10 years, with no salvage value. The machine reverts to the lessor upon the termination of the lease. (c) Pharoah depreciates all machinery it owns on a straight-line basis. (d) Pharoah's incremental borrowing rate is 10% per year. Pharoah does not have knowledge of the 8% implicit rate used by Yates. (e) Immediately after signing the lease, Yates finds out that Pharoah Corp. is the defendant in a suit which is sufficiently material to make collectibility of future lease payments doubtful. If the present value of the future lease payments is $1200000 at January 1,2021 , what is the amount of the reduction in the lease liability for Pharoah Corp. in the second full year of the lease if Pharoah Corp. accounts for the lease as a finance lease? (Rounded to the nearest dollar.) $311148$335148$354263$342263