Assume that sales are generated evenly throughout the year for both com- panies.

a. Calculate the sales reported by Martin Manufacturing in its 2001 and 2002 financial statements for 2000, 2001, and 2002 using both the purchase and pooling-of-interests methods of accounting. Show all calculations.

b. State the effect (higher, lower, or no difference) the purchase method of accounting (IASB GAAP) has on the following fi- nancial measures for Martin when compared with the pool- ing-of-interests method of accounting. Justify your response (i) Sales growth from 2000 through 2002 (ii) Return on year-end 2001 equity (iii) Long-term debt-to-equity ratio as of June 30, 2001

c. Now assume that Martin prepares its financial statements under LS GAAP. State the effect (higher, lower, or no dif- ference) that using the purchase method under U.S. GAAP has on the following financial measures for Martin when compared with the purchase method under IASB GAAP Jus- tify your response. (i) Sales growth from 2000 through 2002 (ii) Return on year-end 2001 equity (iii) Long-term debt-to-equity ratio as of June 30, 200: