Physician reference service prs provides services to

Assignment Help Accounting Basics

Reference no: EM13597962

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?

Reference no: EM13597962

Questions Cloud

Etep construction co is composed of two divisions 1 home : estep construction co. is composed of two divisions 1 home construction and 2 commerical construction. the home

For this interview pose the following questions to your : for this interview pose the following questions to your intervieweehow has having a cpa certification or consulting

Standard absorption cost per unit a cost analyst for : standard absorption cost per unit a cost analyst for stamper manufacturing co. has assembled the following data about

In 2011 cupid construction co ccc began work on a two-year : in 2011 cupid construction co. ccc began work on a two-year fixed price contract project. ccc uses the

Physician reference service prs provides services to : physician reference service prs provides services to physicians including research assistance diagnosis coding and

Lonely guy repair service recently performed repair : lonely guy repair service recently performed repair services for a customer that totaled 400. somehow the bill was lost

Developing raw material cost standards ozark manufacturing : developing raw material cost standards ozark manufacturing co. manufactures and sells household cleaning products. the

Based on past experience it is estimated that 30 of a : cash receipts budget flagstaff co. has actual sales for july and august and fore-cast sales for september october

North division has the following informationsales 900000if : north division has the following informationsales 900000.if this division is eliminated the fixed expenses will be

User Account

All Pages