Reference no: EM133168154

Question - On January 2, 2020, Paul Company signed an agreement to grant a license over a patented technology to Anthony Inc., for an initial contract fee of P500,000 for 4 years. Of this amount, P100,000 was paid when the agreement was signed and the balance payable in four annual payments beginning on December 31, 2020. Paul signed a non-interest-bearing note for the balance. Paul's rating indicates that he can borrow money at 16% for the loan of this type. Assume that substantial services amounting to P150000 had already been rendered by Paul and that additional indirect cost of P12,000 was also incurred. PV factor is 2.80. The collectability of the note is reasonably assured. On January 31, 2020, the license is transferred to Anthony. The license agreement provides that Anthony Inc. has the right to use the entity's intellectual property as it exists at the point in time at which the license is granted. How much is the total net income to be reported on December 31, 2020?