ABC Company purchased a machine on January 1, 2017 for P 2400000 for the express purpose of leasing it.

The machine was expected to have a six-year life, no residual value and be depreciated on a straight-line

basis.

On March 1, 2017, ABC Company leased the machine to a lessee for P600,000 a year for four years ending February 28, 2021.

ABC Company incurred total maintenance and other related costs under the provisions of the lease of P30,000 relating to the year ended December 31, 2017.

The lessee paid P600,000 to ABC Company on March 1, 2017

Required:

Prepare journal entries on the books of ABC Company using the operating lease model.