3 points a 8. Starbeans Inc. operates and franchises coffee shops around the world. On January 1, 2016, the company entered into a franchise agreement with a certain franchisee. As part of its franchise agreement, Starbeans requires a franchisee to pay an initial fee of P1,500,000 of which P500,000 is payable upon the signing of the contract. The balance is payable in five equal annual installments every December 31, for which a non-interest bearing note with effective rate of 10% was issued. The franchise agreement also provides for ongoing payment of royalties equivalent to 5% of sales revenue of the franchisee. As part of the franchise agreement, Starbeans provides pre-operating services for a total cost of P754,894. As of July 1, 2016, the company already satisfied its performance obligation to the franchisee. For the year ended December 31, 2016, the franchisee reported sales revenue in the amount of P1,000,000. What is the net income to be reported by Starbeans for the year ended December 31, 2016 if the collection of the note is NOT reasonably assured? * O A. P375,490 O B. P325,490 C. P299,674 O D. P125,816