At the end of the fiscal year, Acme Ltd$.,$ one of your customers owes your company $$75000.$ Acme has declared bankruptcy and the business has been dissolved with no assets. Your chief financial officer has prepared the financial statements and the balance sheet includes the Acme balance as an asset even though the debt will never be collected by your company.

$($a$)$ Which accounting standard $($principle$)$ has not been followed by the financial official who knows the situation? Give reasons for your answer.

$($b$)$ Is the net income understated or overstated and by how much?

$($c$)$ Are the assets overstated or understated and by how much?