Wiwil Co. from Malaybalay City leased an equipment of January 3, 2017 from the lessor Gui-yang Corp. The lease contract provides the following:

Annual fixed payments in advanced at January 3 of each lease year Php 2,000,000

Initial direct cost paid on January 3, 2017 500,000

Lease incentive received 300,000

Residual value guaranteed 600,000

Executory cost 50,000

Contractual lease term 5 years Useful life of equipment 6 years

The implicit rate of the lease was at 8%.

a. Compute for the cost of the right of use asset recognized by Wiwil at the start of the lease.

b. What is the interest expense for 2017?

c. What is the depreciation expense for 2017?