Can Please Help Me: Accounting / Intermediate Accounting 2

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14. On January 1, 20x1, Chirp Co. leased out to Tweet Inc. a machine, which Chirp Co. has recently acquired for P394,833. The machine has an estimated useful life of 5 years, the lease contract states an annual rent of P120,000 due at the beginning of each year over a lease term of 4 years. Chirp Co. incurred initial direct costs of P25,000 in negotiating the lease. The machine reverts back to Chirp Co. at the end of the lease, at which time the residual value of the machine is expected to be P10,000. What is the interest rate implicit in the lease and how much is the carrying amount of the net investment in the lease on Dec 31, 20x1? a. 10%; 212,815 b. 11%; 332, 815 c. 11%, 212,815 d. 12%; 298,564