The pharmaceutical industry spends billions of dollars each year on research and development. Rather than capitalize these

Question:

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 keyword search of Pharmaceutical Companies using the search engine of your choice 

(e.g., Yahoo, Google).

 Your search will result in a list of companies that research and develop pharmaceutical products. 

Select three of these companies and obtain their 10-K reports using the SEC’s EDGAR system or going directly to the Web sites of the companies you choose. 


Instructions

a. For each of the companies you selected, determine:

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

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

3. Total R&D expense as a percentage of net sales. 

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

b. Using information from the 10-K reports, summarize briefly the kinds of drugs being researched and developed by each of these companies. To a potential investor, which company appears to be the most innovative and promising? Explain.

Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial And Managerial Accounting

ISBN: 12

14th International Edition

Authors: Jan R. Williams, Joseph V. Carcello, Mark S. Bettner, Sue Haka, Susan F. Haka

Question Posted: