On January 1, 2020, Tine Company signed an agreement to operate as a franchisee of Sarawat Corp. for an initial franchise fee of P937,500 for 7 years. Of this amount, P175,000 was paid when the agreement was signed and the balance payable in four annual payments beginning on December 31, 2020. Tine signed a non-interest bearing note for the balance. Tine's rating indicates that borrow money at 16% for the loan of this type. Assume that substantial services amounting to P283,500 had already been rendered by Sarawat and that additional indirect franchise cost of P25,500 was also incurred. (Round PV factor to 2 decimal places). If the collection of the note is not reasonably assured, the net income for the year ended December 31, 2020 is:
On January 1, 2020, Tine Company signed an agreement to operate as a franchisee of Sarawat Corp. for an initial franchise fee of P937,500 for 7 years. Of this amount, P175,000 was paid when the agreement was signed and the balance payable in four annual payments beginning on December 31, 2020. Tine signed a non-interest bearing note for the balance. Tine's rating indicates that borrow money at 16% for the loan of this type. Assume that substantial services amounting to P283,500 had already been rendered by Sarawat and that additional indirect franchise cost of P25,500 was also incurred. (Round PV factor to 2 decimal places). If the collection of the note is not reasonably assured, the net income for the year ended December 31, 2020 is:
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