Woody Company signed into a ten-year leasing arrangement for industrial equipment with another firm on January 1, 20X1. Annual lease payments of P1,000,000 are due on December 31st. The lessor projected a 10% return on the lease, which is reflected in the lease's implicit rate. The equipment is intended to have a usable life of 12 years. The deal includes a buy option that will almost certainly be exercised. The buy option has an exercise price of P500,000. The present value of a one-year ordinary annuity at 10% for 10 years is 6.14, while the present value of a one-year ordinary annuity at 10% for 10 years is 0.39. What amount should be reported as lease liability on December 31, 20X1?