What amount of unearned franchise fees from heart

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Brave Corporation authorized Heart on January 1, 2010 to operate as a franchisee for an initial franchise fee of P2,500,000. Of this amount, P1,500,000 was received upon signing of the contract and the balance is due in two equal annual payments beginning January 1, 2011. The contract provides that the nonrefundable downpayment represents fair measure of the services already performed, however, substantial performance is still required of Brave. Collectibility of the note is reasonably certain. If the present value of the two annual payments is P895,000.

Problem 1: What amount of unearned franchise fees from Heart should Brave report on December 31, 2010? Solve the following problem in good accounting form.

Reference no: EM132942832

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