Abu Dhabi Inc. acquires a new manufacturing equipment of January 1, 2020 on installment basis. The deferred payment contract provides for a downpayment of P300,000 and an 8-year note for P3,104,160. The note is to be paid in 8 equal annual installment payments of P388,020 including 10% interest. The payments are to be made in December 31 of each year, beginning December 31, 2020. The equipment has a cash price equivalent of P2,370,000. Abu Dhabis financial year-end is December 31.

What is the amount of discount on Notes Payable to be recognized on January 1, 2020?

a. P1,034,160 C) P827,160

b. 310,416 D) P 0