On December 31, 2018, Whistle Company leased a machine from Poll Company for a five-year period. Equal annual payments under the lease are P2,100,000, including P100,000 annual executory cost and are due on December 31 of each year. The first payment was made on December 31, 2018 and the second lease payment was made on December 31, 2019. The five lease payments are discounted at 10% over the lease term. The present value of minimum lease payments at the inception of the lease and before the first annual payment was P8,340,000.

1. What total amount shall be included in the income statement for the year 2018? A. 0 B. 100,000 C. 834,000 D. 934,000

2. What total amount shall be included in the income statement for the year 2019? A. 100,000 B. 634,000 C. 734,000 D. 834,000

with solution