At the beginning of current year, Ashe Company entered into a ten-year noncancelable lease requiring year-end payments of P1,000,000. Ashe's incremental borrowing rate is 12%, while the lessor's implicit interest rate, known to Ashe, is 10%. Present value factors for an ordinary annuity for ten periods are 6.145 at 10%, and 5.650 at 12%. On the same date, Ashe Company paid initial direct cost of P200,000 in negotiating and securing the leasing agreement. Ownership of the property remains to the lessor at expiration of the lease. The leased property has an estimated economic life of 12 years. 1. What amount should be capitalized as cost of the Right to Use Asset? 6,145,000 6,345,000 5,650,000 5,850,000 2. What is the depreciation for the current year? 614,500 634,500 528,750 565,000 3. What is the lease liability at the end of the current year 5,328,000 5,552,000 5,759,500 5,979,500