Pau Company leased a machine on January 1, 2019 with the following information provisions:

Annual lease payment in advance at the

beginning of each year, starting January, 2019P2,000,000

Lease term10 years

Useful life of machine15 years

Implicit interest rate in the lease12%

PV of an ordinary annuity of 1 at 12% for 10 periods5.650

PV of an annuity of 1 in advance at 12% for 10 periods6.328

PV of 1 at 12% for 10 periods0.322

The entity hasan option to purchase the machine on January 1, 2029 by paying P400,000.

At the commencement date , it is reasonably certain that the purchase option will be exercised.

Required: Prepare journal entries on the books of Pau Company for 2019 to 2021.