first two photos are the background information for the questions. There are requirements in the third image.

QUESTION THREE Red Tree Limited (Red). Blue Tree Limited (Blue), and Green Tree Limited (Green) are three independent companies owned by three different groups of shareholders in the City of Lightbridge. Red owns 5 parcels of land north of Avenue X. The parcels are of equal size in square blocks measuring 25 square kilometres each. Blue owns another 5 parcels of land, all the same size, in the area between Avenue X and Avenue Y. Green owns 5 other parcels of land, also of the same size, in the area south of Avenue Y. The 15 parcels of land were purchased by the three companies at different time and at different prices over the past 40 years. Cost $10,000 purchased 40 years Cost $10,000 purchased 40 years | Cost $10,000 purchased 40 years Cost $10,000 purchased 40 years $10,000 purchased 40 years 5 parcels of land owned by Red Tree Limited Avenue X Cost $10,000 purchased 40 years apo Avenue Y Cast $50,000 purchased 5 years Cost $20,000 purchased 30 years ago Cost $30,000 purchased 20 years apo Cost 560.00 purchased 10 years ago Cost 550.000 purchased five years ago 5 parcels of land owned by Blue Tree Limited Cost $50,000 purchased 5 years | Cost $50,000 purchased 5 years Cost $50,000 purchased 5 years 120 Cost $50,000 purchased 5 years 5 parcels of land owned by Green Tree Limited ao LO Mr. Slack, Mr. Good, and Mr. Diligent, are the managers of Red, Blue, and Green respectively. The managers were all hired two years ago at the same time but separately by the shareholders of the respective companies. Each manager is responsible for managing the daily operations of the company and making decisions on how the land is to be used to generate income for the company. The 15 parcels of land are all identical in terms of their market values and their revenue-generating capabilities. The three companies are identical in all respects except for the cost of the land and the managers who run the companies. In this setting, managerial skills and abilities are the only factors that affect the amount of income earned by each company. Each company has adopted the policy of keeping only $50,000 in cash for operational needs and distributing all remaining cash income to the shareholders. You have also found out that the market value of land in the area has not changed in the past five years. Mr. Slack is known for slacking off and Red reported $20,000 of net income for the current year. Mr. Good puts in a good amount of work and Blue reported $25,000 of net income. Mr. Diligent works diligently and Green reported $30,000 of net income for the year. The following table shows the current year income statements and balance sheets of the three companies prepared in accordance with two measurement systems: () historical cost accounting and (ii) market value accounting. (ii) Market Value Accounting (1) Historical Cost Accounting Red Tree Limited Income Statement For the year ended December 31, 20X1 Revenue $ 25.000 Expenses 5.000 Net Income S 20.000 Red Tree Limited Balance Sheet December 31, 20X1 Cash S 50,000 Shareholders' Equity $ 100.000 Land 50.000 S 100.000 S 100.000 Red Tree Limited Income Statement For the year ended December 31, 20X1 Revenue $ 25,000 Expenses 5.000 Net Income $ 20,000 Red Tree Limited Balance Sheet December 31, 20X1 Cash $ 50,000 Shareholders' Equity $ 300.000 Land 250.000 S 300.000 $ 300,000 Blue Tree Limited Income Statement For the year ended December 31, 20X1 Revenue $ 29,000 Expenses Net Income $25.000 Blue Tree Limited Balance Sheet December 31, 20X1 Cash S 50,000 Shareholders' Equity 5220.000 Land 170.000 $ 220,000 $ 220,000 Blue Tree Limited Income Statement For the year ended December 31, 20X1 Revenue $ 29,000 Expenses 4.000 Net Income S 25.000 Blue Tree Limited Balance Sheet December 31, 20X1 Cash $ 50,000 Shareholders' Equity S 300.000 Land 250.000 $ 300.000 S 300.000 Green Tree Limited Income Statement For the year ended December 31, 20X1 Revenue $ 33,000 Expenses 3.000 Net Income $30.000 Green Tree Limited Balance Sheet December 31, 20X1 Cash S 50,000 Shareholders' Equity S 300.000 Land 250,000 $ 300,000 S 300.000 Green Tree Limited Income Statement For the year ended December 31, 20X1 Revenue S 33,000 Expenses 3.000 Net Income $ 30.000 Green Tree Limited Balance Sheet December 31, 20X1 Cash 50,000 Shareholders' Equity $ 300.000 Land 250.000 $ 300.000 $ 300.000 "Return on assets" (ROA) is a useful measure for showing how profitable a company is relative to the company's total assets. "Return on Equity" (ROE) is another useful ratio that measures a company's net income relative to the equity capital provided by the shareholders. When a company has no debt, the ROA and the ROE produce the same results. These ratios are commonly used for assessing and comparing profitability across companies of different sizes. The following table shows the current year ROA and ROE for the three companies. The ratios are calculated using the financial statement information obtained from (1) historical cost accounting and (ii) market value accounting. (1) Historical Cost Accounting (11) Market Value Accounting Red Tree Limited ROA-ROE - 20,000/100,000 - 20.0% Red Tree Limited ROA-ROE - 20,000/300,000 - 6.7% Blue Tree Limited ROAROE - 25,000/220,000 -11.4% Blue Tree Limited ROA-ROE -25,000/300,000 - 8.3% Green Tree Limited ROA - ROE - 30,000/300,000 - 10.09% Green Tree Limited ROA-ROE - 30,000/300.000 - 10.0% Required: (1) Between "historical cost accounting" and "market value accounting". which set of the corresponding company ROAs and ROEs do you think gives us results that are more meaningful and useful for evaluating managerial performance? (ii) Assume that, next year in 20X2, Blue Tree Limited is going to sell one parcel of land and Mr. Good, the company manager, can choose which one of the 5 parcels of land to sell. Between "historical cost accounting and market value accounting", which system do you think will generate a more "reliable" measure of the net income of the company? (in) "Comparability of financial information will be enhanced if all companies use historical cost accounting". Do you agree with this statement? Briefly explain your