On January 1, 2020, Rio Company leased a building with the following provisions:

Annual rentals payable in advance at the beginning of each year, starting January 1, 2020 P250,000

Exercise price of the purchase option (reasonably certain to be exercised by the lessee) P200,000

Lease term 10 years

Economic life of the machine 15 years

Interest rate implicit in the lease 12%

12. What is the depreciation expense for the year 2020?

13. How much is the interest expense for the year 2020?

14. Assuming the lessee did not exercise the purchase option at the end of the lease term, how much loss should the lessee recognize?