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CASE 2 On June 1, 20x1, Manu Co. entered into three (3) franchise agreements. Information on these agreements is summarized below: Franchisee Probability of Collection

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CASE 2 On June 1, 20x1, Manu Co. entered into three (3) franchise agreements. Information on these agreements is summarized below: Franchisee Probability of Collection Abby Candy Reasonably assured Doubtful Significantly uncertain Cash down payment P20,000 20,000 20,000 P60,000 Present value of note 60,747 48,037 33,801 P142,585 Direct cost incurred 36,500 27,000 22,750 86,250 Efren Total Additional Information: 1. The cash down payments are nonrefundable and were received upon the signing of contracts. 2. The appropriate discount rate on all the contracts is 12%. The first installment on each of the notes receivable is due on June 1, 20x2. 3. It was assessed that the receivable from the franchisee Candy is doubtful of collection. Manu Co. expects to provide the customer a price concession and concludes that it is probable that it will collect only half of the P48,000 note receivable. The adjusted present value of the note is P24,018. REQUIRED: 3. Total franchise fee revenue 4. Net income 5. Total revenue

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