Discussion Topic 2 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.
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.