Lumine Company factored P8,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by Lumine Company.

The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000.

The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable.

In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days.

1. If all accounts are collected, what is the loss on factoring the accounts receivable? Show computation.
2. If all accounts are NOT collected, what is the loss on factoring? Show computation.