An entity leased equipment for the entire nine-year useful life, agreeing to pay P1,000,000 at the start of the lease term on January 1, 2021, and P1,000,000 annually on each January 1 for the next eight years. The present value on January 1, 2021 of the nine lease payments over the lease term using the rate implicit in the lease which the lessor knows to be 10% was P6,330,000. The January 1, 2021 present value of the lease payments using the incremental borrowing rate of 12% was P5,970,000. The entity made a timely second lease payment. What amount should be reported as finance lease liability on December 31, 2022? P5,330,000 P4,863,000 P4,970,000 P4,467,000