On January 1, 2019, MOGUL CORP. and AXE INC. incorporated DOTA INC. by investing P1,000,000 and P2,000,000, respectively for a capital ratio of 60:40. The contractual agreement of the incorporating entities provided that the decisions on relevant activities of DOTA will require the unanimous consent of both entities. Both MOGUL and AXE will have rights to the net assets of DOTA. During 2019, DOTA's financial statements provided the following data: - DOTA reported a net income of P1,000,000 for 2019 and paid cash dividends of P400,000 on December 31, 2019. - During 2019, MOGUL sold inventory to DOTA for P100,000 with a 40% gross profit on the transaction. 80% of the goods sold were sold by DOTA to third parties during the year. - During 2019, DOTA sold inventory to AXE for P200,000 with a 30% gross profit on the transaction. 60% of the goods were sold by AXE to third parties during the year. - On July 1, 2019, DOTA sold MOGUL a machinery at a loss of P50,000. At the time of sale, the machinery has remaining useful life of 2 years. - On October 1, 2019, AXE sold DOTA an equipment at a gain of P90,000. At the time of sale, the machinery has a remaining life of 3 years. REQUIREMENTS: (a) What is the investment income to be reported by MOGUL and AXE for the year ended 2019? (b) What is the balance of investment in DOTA INC. be reported by MOGUL and AXE on December 31, 2019? Problem 4 (12 pts) On January 1, 2019, RAIGOR CORP, and EARTHSHAKER INC. incorporated STONEHOOF COMPANY which has its fiscal and operational autonomy. The contractual agreement of the incorporating entities provided that the decisions on relevant activities of STONEHOOF will require the unanimous consent of both entities. Both RAIGOR and EARTHSHAKER will have rights to the net assets of STONEHOOF. Both entities invested P500,000 each equivalent to 40:60 capital interest of STONEHOOF COMPANY. The financial statements of the joint venture for its 3 -year operation are as follows: REQUIREMENTS: Determine (a) the investment income for the years 2019-2021; (b) the balance of investment in joint venture for the years ended December 31, 2019-2021 for both RAIGOR and EARTHSHAKER