N Corp. entered into a nine-year finance lease on a warehouse on December 31, 2021. Lease payments of $31,000, which includes maintenance services of $1,500, are due annually, beginning on December 31, 2022, and every December 31 thereafter. N Corp. does not know the interest rate implicit in the lease; N's incremental borrowing rate is 13%. The rounded present value of an ordinary annuity for nine years at 13% is 5.1317. What amount should N report as recorded lease liability at December 31, 2021?

Present value of lease liability at December 31, 2021 is $151,385.15

Annual lease payment for warehouse is computed using the equation given below:

Annual lease payment = Total lease payment - Maintenance service cost

                                   = $31,000 - $1,500

                                   = $29,500

Present value of lease liability at December 31, 2021 is computed using the equation given below:

Present value = Annual lease payment × PVIFA (13%, 9)

                     = $29,500 × 5.1317

                     = $151,385.15

Hence, the present value of lease liability at December 31, 2021 is $151,385.15