On April 1, 2004, Batangas Company bought machinery under a contract that required a down

payment of P500,000 plus 24 monthly payments of P300,000 for total payments of

P7,700,000. The cash price of the machinery was P6,500,000. The machinery has an estimated

useful life of four years and estimated residual value of P500,000. Batangas uses SYD method of

depreciation. The carrying amount of this machine at December 31, 2005 is

a. P4,550,000

b. P2,250,000

c. P1,950,000

d. P2,750,000