On January 1, Porter Moving and Storage Leased a Truck

Multiple Choice

On January 1, Porter Moving and Storage leased a truck for a four-year period, at which time possession of the truck will revert back to the lessor. Annual lease payments are $30,000 due on December 31 of each year, calculated by the lessor using a 5% discount rate. If Porter's revenues exceed a specified amount during the lease term, Porter will pay an additional $12,000 lease payment at the end of the lease. Porter estimates a 60% probability of meeting the target revenue amount. What amount, if any, should be added to the right-of-use asset and lease payable under the contingent rent agreement?

A) No additional amount should be added.
B) An additional $6,000 should be added.
C) An additional $7,200 should be added.
D) An additional $12,000 should be added.