Skkrrt Company entered into a lease agreement for the use of a new equipment on January 1, 2020. The lease agreement requires an annual payment of P1,500,000 for five years starting December 31, 2020....

Skkrrt Company entered into a lease agreement for the use of a new equipment on January 1, 2020. The lease agreement requires an annual payment of P1,500,000 for five years starting December 31, 2020. Skkrrt guaranteed a residual value of P711,090 at the end of the contract. The equipment will revert to the lessor at the end of five years. The equipment has an economic life of 10 years. The implicit rate for this lease is 16% where the present value of 1 for five periods is 0.4761 and the present value of an ordinary annuity of 1 is 3.2743. What is the balance of lease liability on December 31, 2020?