House Publishers offered a contest in which the winner would receive P1 million payable over 20 years. On December 31, 2016, House announced the winner of the contest and signed a note payable to the winner for P1 million, payable in P50,000 installments every January 2. Also on December 31, 2016, House purchased an annuity for P418,250 to provide the P950,000 prize monies remaining after the first P50,000 installment, which was paid on January 2, 2017.

In its 2016 profit or loss, what should House report as contest prize expense?

a. P0

b. P418,250

c. P468,250

d. P1,000,000