On December 31, 2018 Corral Company enters into a five-year lease agreement with Island Company (lessee) involving an equipment (front-end loader). The equipment has a cost of P85,000 and with a fair value/ selling price of P100,000. Island Company will pay P23,237.09 per year at the beginning of each year. The equipment has an estimated fair value of P5,000 at the 5-year lease term. The imputed rate of interest at the time lease contract was signed is 10%. The contract is a sales type. If the residual value is guaranteed by the lessee, what are the amounts of sales and cost of sales should the lessor recognize on December 31, 2018 respectively?* P95,000 and P80,000 P96,895.40 and P81,895.40 P97,450 and P85,000 P100,000 and P85,000 On December 31, 2015 Island Company enters into a five-year lease agreement with Corral Company (lessor) involving an equipment (front-end loader). The equipment has a cost of P100,000 and with a fair value of P100,000. Island Company will pay P23,237.09 per year at the beginning of each year. The equipment has an estimated fair value of P5,000 at the end of the 5-year lease term. The imputed rate of interest at the time the lease contract was signed is 10%. If residual value is guaranteed by the lessee, what is the amount of annual depreciation should Island Company recognize? * P19,000 P20,000 P22,237.09 P23,237.09