XY Inc., franchisor, entered into franchise agreement with AB Inc., franchisee on July 1, 2020. The initial franchisee fees agreed upon is P850,000, of which P150,000 is payable upon signing and the balance to be covered by a non-interest bearing note payable in four equal annual installments. It was agreed that the down payment is not refundable, notwithstanding lack of substantial performance of services by franchiser. Probability of collection is unlikely.

The following expenses were incurred:

Initial Services:

Direct Cost 235,000

Indirect Cost 64,000

Continuing Services

Direct Cost 23,900

Indirect Cost 9,000

The management of AB has estimated that they can borrow loan at the rate of 12% (PV factor 3.04). The franchisee commenced its operations on July 31, 2020. A continuing franchise fee equal to 5% of its monthly gross sales was also specified in the contract. AB reported gross sales of P950,000 for the month.

How much is the net income to be reported on August 31, 2020?