Medical teks mt provides services to physicians including

Reference no: EM13602202

Medical Teks (MT) provides services to physicians including research assistance, diagnosis coding and medical practice software including an advanced medical record cross-referencing system. MT 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, MT spends a lot of money sending professionals to trade shows. In addition, MT has agreements with several clients whereby the client requests a presentation of a competitor's services. An MT 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 May of this year, MT began selling a software product substitute before the competitor's software was released. The competitor, National Tech Med, sued for copyright infringement and won. MT had to withdraw its product from the market and pay $1.5 million in damages. MT immediately negotiated an agreement with National Tech Med to sell National Tech 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 MT to continue to offer a full line of services.

MT's accountant, Sam, initially recorded the cash payments as "Loss from Lawsuit" and "Product Development," respectively. However, Tom, the controller, instructed Sam 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 Sam do?

Reference no: EM13602202

Questions Cloud

On august 31 jenks co partially refunded 180000 of its : on august 31 jenks co. partially refunded 180000 of its outstanding 10 note payable made one year ago to arma state

Find the maximum wavelength nm of ultraviolet light in air : solar cells are often coated with a transparent thin film of silicon monoxide sio n 1.45 to minimize re?ective losses

Calculate the energy of attraction in ev between a cation : calculate the energy of attraction in ev between a cation with a valence of 2 and an anion with a valence of -1 the

A researcher examines the records of all registered voters : 1. a researcher examines the records of all registered voters in one city and finds that 43 are registered democrats.

Medical teks mt provides services to physicians including : medical teks mt provides services to physicians including research assistance diagnosis coding and medical practice

Suze and bess formed the suzy b company by making capital : suze and bess formed the suzy b company by making capital contributions of 130000 and 195000 respectively. they

Charges for lab tests are consistently higher at valley : charges for lab tests are consistently higher at valley view than at other hospitals and have resulted in many

A researcher examines the records of all registered voters : 1. a researcher examines the records of all registered voters in one city and finds that 43 are registered democrats.

The standard cost of product b manufactured by tlc company : the standard cost of product b manufactured by tlc company includes 3 unit s of direct materials at 6.75 per unit

User Account

All Pages