This is a multiple part question and covers material found in Chapter 9. Chapter 9's Dilemma Med-Aid, Inc. provides services to physicians including research assistance, diagnosis coding and medical practice software including an advanced medical record cross- referencing system. Med-Aid 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, Med-Aid spends a lot of money sending professionals to trade shows. In addition, Med-Aid has agreements with several clients whereby the client requests a presentation of a competitor's services. A Med-Aid 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 February of this year, Med-Aid began selling a software product substitute before the competitor's software was released. The competitor, P & S Consultants, sued for copyright infringement and won. Med-Aid had to withdraw its product from the market and pay $1.5 million in damages. Med-Aid immediately negotiated an agreement with P & Sto sell the their product (since Med-Aid was prohibited from offering its own version for five years). This agreement cost an additional $1.3 million, but it allowed Med-Aid to continue to offer a full line of services. Med-Aid's accountant, Sydney Newton, initially recorded the cash payments as "Loss from Lawsuit" and "Product Development" respectively. However, Noah Tilman, the controller, instructed Sydney to create an intangible asset, named "Goodwill" and charge both costs to this account. "We're protected from another law suit as long as this agreement is in effect," he says. "It's about as close to goodwill as we'llever come from our competitors. We might as well amortize the cost rather than take the full hit to income right away." Questions: 1. Are there any ethical issues in this scenario? If so, what are they? 2. Are there any GAAP issues? Explain. 3. What should Sydney do