Sipchem (Lessor) and Burke (Lessee) signed a lease agreement for an equipment on January 1, 2018. The following are the terms of the agreement.

1. The term of the lease is five years, and Burke Corp has to pay SR 24,891 at the beginning of each year.
2. The fair value of the equipment at the starting of the lease was SR100,000
3. The executory costs that are to be paid by the lessee are SR950
4. The incremental borrowing rate is 10% p.a.

Requirement:

Calculate the reduction of lease liability as on 1/1/2019.