Please turn in a one (1) page paper following APA formatting. Physician Referenc

Question

Please turn in a one (1) page paper following APA formatting.

Physician Reference Service (PRS) provides services to physicians including research assistance, diagnosis coding and medical practice software including an advanced medical record cross-referencing system. PRS is aggressive in monitoring other firms' offerings and ensuring that its services are comparable to all others.
Because of its need to stay abreast of new product offerings, PRS spends a lot of money sending professionals to trade shows. In addition, PRS has agreements with several clients whereby the client requests a presentation of a competitor's services. A PRS employee poses as an employee of the client's office and attends the presentation, obtaining as much data and sample information as possible. The cost of the travel and attending presentations is charged to Product Development and expensed during the current year.
In April of this year, PRS began selling a software product substitute before the competitor's software was released. The competitor, Compu-Med, sued for copyright infringement and won. PRS had to withdraw its product from the market and pay $1.5 million in damages. PRS immediately negotiated an agreement with Compu-Med to sell Compu-Med's product (since it was prohibited from offering its own version for five years.) This agreement cost an additional $1.3 million, but it allowed PRS to continue to offer a full line of services.
PRS's accountant, Mary Linsey, initially recorded the cash payments as "Loss from Lawsuit" and "Product Development," respectively. However, Jack Grand, the controller, instructed Mary to create an intangible asset, named "Goodwill" and charge both costs to this account. "We're protected from another lawsuit as long as this agreement is in effect," he says. "It's about as close to goodwill as we'll ever get from our competitors. We might as well amortize the cost rather than take the full hit to income, anyway."

Required:
1. What are the ethical issues?
2. What should Mary do?

Explanation / Answer

1. Costs incurred internally to create intangibles are generally expensed. Thus, even though a company may incur substantial research and development costs to create an intangible, it expenses these costs. Amortization of Intangibles: Intangibles have either a limited useful life or an indefinite useful life. For example, a company has both types of intangibles. Then the company amortizes its limited life intangible assets. It does not amortize intangible assets with an indefinite life. 2.Companies primarilly use marketing -related intangible assets in the marketing or promotion of products or services.Goodwill is often referred to as the most intangible of intangible assets, because it is only identified with the business as a whole . The only way to sell it is to sell the business. Recording Goodwill: Internally Created Goodwill . Goodwill generated internallly sould not be capitalized in the accounts.

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