I am currently enrolled in acc 213. We are doing chapter 14 and i am struggling with the following quesions.

14.1A

Read each of the following statements carefully and indicate whether each is true or false.

1. Many nonpublic companies are not required to follow GAAP.

2. The American Institute of CPAs has, in the past, had a strong influence on the development of auditing principles.

3. The FASB is a division of the Internal Revenue Service.

4. The PCAOB regulates CPA firms that audit nonpublic companies.

5. Accounting principles and standards are based on the assumption that the statements will be read by individuals who have little understanding of accounting and financial reporting.

6. The IASB has authority to accept or reject financial accounting principles and standards developed by the FASB.

14.2A

Indicate in each case whether the item has been handled in accordance with generally accepted accounting principles. If so, indicate the key basic concept that has been followed. If not, indicate which concept has been violated and tell how the item should have been recorded or presented.

1. The assets listed in the accounting records of Cobbs Pharmacy include a money market account of Jason Cobb, owner of the business. Cobb has established the savings account so that if he needs to invest more cash in the pharmacy, it will be readily available.

2. On December 31, 2013, an account receivable of $1,800 due from Sue Johnson, who is in the county jail on charges of passing bad checks, is not included in the balance sheet. The owner of the business has written off the amount because he feels certain that the debt will not be paid, even though Johnson insists that she will pay after she gets out of jail and finds a job.

3. The equipment of Ace Plastics Company has a book value (cost less accumulated depreciation) of $180,000. However, the equipment could not be sold for more than $40,000 today. The companys owner thinks that the machinery should nevertheless be reported on the balance sheet at $180,000 and depreciated over its useful life, because the equipment is being used regularly in the business and it is expected to be used profitably for the next five yearsthe remaining useful life that is being used for depreciation purposes.

4. Utah Company manufactured machinery for its own use at a cost of $600,000. The lowest bid from an outsider was $650,000. Nevertheless, the company recorded the machinery at $600,000.

5. On December 31, 2013, the balance sheet of DVD Depot reported prepaid insurance at $4,000. The prepaid insurance reflects the refund value of a three-year fire insurance policy that originally cost $6,000 on January 1, 2012

6. At the beginning of 2013, FLA Company bought a building for $3,000,000. At the end of 2013, the buildings value was appraised at $3,300,000. Since there was an increase in value, the company did not record depreciation on the building and also did not increase the $3,000,000 recorded in the building account at time of purchase.

Analyze: If FLA Company uses the accounting treatment described in Item 6, is net income