The following information relates to Wilson, Inc.s equipment lease with an inception date of January 1:

• Fair value of equipment at lease inception, $91,200
• Lease term, 4 years
• Economic life of property, 5 years
• Implicit interest rate, 6%
• Annual lease payment due on December 31, $25,600
• Present value of the lease payments, $88,707

The equipment reverts back to the lessor at the end of the lease term.

By how much does the lease liability decrease during the first year?

Select one:

a. $20,278

b. $20,128

c. $25,600

d. $5,322