Tris leased a facility from Divergent Company in January 1, 2016. Terms of the lease were as follows:

Annual rental P240,000

Annual real property tax assumed by Tris 60,000

Security deposit 300,000

Lease term 12 years

 Divergent agreed to pay entire amount of the fees above including the annual rental for 2017. In addition to annual rental and real property taxes, part of the lease agreement was for Tris to improve the facility. The improvement was completed on January 1, 2018. Details of the Improvements were as follows:

Cost of leasehold improvement P3,000,000

Estimated useful life of improvement 15 years

REQUIRED: 

Determine the following:

1. The income to be reported by Divergent in 2016

2. The income to be reported by Divergent in 2017

3. The income to be reported by Divergent in 2018 assuming the company opted to report income from improvement using the lump-sum method.