Financial Reporting

Respond to the following in a minimum of 250 words:

This week focuses on criteria for calculating capital changes and consolidated financial statements.

Discuss

The pharmaceutical industry spends billions of dollars each year on research and development. Rather than capitalize these R&D expenditures as intangible assets, companies are required to charge them to expense in the year incurred. Perform a key word search of pharmaceutical companies using the search engine of your choice. Select 2 of these companies and obtain their 10K report by using the SEC’s EDGAR system or going directly to the websites of the company you choose. For each company selected, determine:

1. Total R&D expense for the most current year

2. Total R&D expense as a percentage of totaloperating costs and expenses

3. Total R&D expense as a percentage of netsales

4. The percentage by which operating income wouldhave increased had the entire R&D expenditure been recorded as anintangible asset instead of being charged to expense.

5. Using information from the 10-K reports,summarize briefly the kinds of drugs being researched and developed by each ofthese companies. To a potentialninvestor, which company appears to be the most innovative and promising? Please explain.

 
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