Nace Manufacturing Company Leased a Piece of Nonspecialized Equipment for Use

Nace Manufacturing Company leased a piece of nonspecialized equipment for use in its operations from Righteous Leasing on January 1, 2019. The 10-year lease requires lease payments of $8,000, beginning on January 1, 2019, and at each December 31 thereafter through 2027. The equipment is estimated to have a 10-year life, is depreciated on the straight-line basis and will have no residual value at the end of the lease term. Nace's incremental borrowing rate is 6%. Initial direct costs of $1,400 are incurred by the lessee on January 1, 2019. Righteous Leasing acquired the asset just prior to the lease term at a cost of $63,468. Collection of all lease payments is reasonably assured. What is the amount of the lease liability recorded by Nace at the lease's commencement?

A) $58,881
B) $62,414
C) $63,468
D) $64,868