An entity purchased a machine for P8,500,000 on January 1,2020 and received a government grant of P1,000,000 towards the capital cost. The policy is to treat the grant as a reduction in the cost of asset. The machine is to be depreciated on a straight line basis over 5 years with residual value of P500,000. On January 1, 2022, the grant became fully repayable because of noncompliance with conditions. What is the depreciation for 2023?

1,500,000

1,600,000

1,200,000

1,400,000

What is the answer and why is that the answer?