In connection with your audit Jonli Company, you noted that the company has a long-standing policy of acquiring company equipment, by leasing.

In 2021, the company entered a lease for a new machine. The lease stipulates those annual payments will be made for 5 years.

The payments are to be made in advance on December 31 of each year. At the end of the 5-year period, Jonli may purchase the machine.

The estimated economic life of the equipment is 12 years. Jonli uses the calendar year for reporting purposes and straight-line depreciation for other equipment. In addition, the following information about the lease is also available:

Annual lease payments (including executory costs of P5,000): 60,000

Purchase option price: 25,000

Estimated fair value of machine after 5 years: 75,000

Implicit rate: 10%

Date of the first lease payment: Jan. 1, 2021

Based on the foregoing and the results of your audit, compute for the following: (Round off present value factors to decimal places.)

1. Cost of right-of-use asset

A. 224,017

B. 229,345

C. 244,868

D. 275,913

2. Lease liability as of December 31, 2021

A. 130,919

B. 136,780

C. 153,855

D. 189,686

3. Current portion of the lease liability at December 31, 2021

A 36,013

B. 39,614

C. 41,322

D. 41,908

4. Interest expense for the year 2021

A. 0

B. 16,902

C. 17.435

D. 18,987

5. Depreciation expense for the year 2021

A. 18,668

B. 19,112

C. 20,406

D. 48,974