9. Capitalizing R&D Below are R&D expenses and Sales reported on the Income Statement for Pharma Ltd. 2015 2018 2019 Year R&D Expense Sales $260 $2,100 2016 $290 $2,500 2017 $310 $2,800 $420 $2,850 $530 $3,100 2020 $590 $3,500 Assume that marginal tax rate is 21%. Instead of expensing R&D, if we were to capitalize R&D and put it on the balance sheet, assume the useful life of R&D capital is 3 years and all R&D costs are spent at the start of the year. 6 points 9.1 Complete the following table (shaded cells) 2018 2019 2020 R&D Capital Amoritzation Expense 3 points 2 points 2 points 9.2 Outline all the adjustalents (including amounts) we make to the Balance sheet and the income statement if we capitalize R&D instead of e 9.3 Explain conceptually why we would capitalize R&D instead of expensing R&D as part of our own adjustments. 9.4 Explain conceptually the difference between R&D Expense/Sales and Amortization/Sales. 9. Capitalizing R&D Below are R&D expenses and Sales reported on the Income Statement for Pharma Ltd. 2015 2018 2019 Year R&D Expense Sales $260 $2,100 2016 $290 $2,500 2017 $310 $2,800 $420 $2,850 $530 $3,100 2020 $590 $3,500 Assume that marginal tax rate is 21%. Instead of expensing R&D, if we were to capitalize R&D and put it on the balance sheet, assume the useful life of R&D capital is 3 years and all R&D costs are spent at the start of the year. 6 points 9.1 Complete the following table (shaded cells) 2018 2019 2020 R&D Capital Amoritzation Expense 3 points 2 points 2 points 9.2 Outline all the adjustalents (including amounts) we make to the Balance sheet and the income statement if we capitalize R&D instead of e 9.3 Explain conceptually why we would capitalize R&D instead of expensing R&D as part of our own adjustments. 9.4 Explain conceptually the difference between R&D Expense/Sales and Amortization/Sales