Pfizer Inc. Data for the year ended December 31, 2023:

Item	Amount
Research and Development Costs	$7,000,000
Estimated Future Benefits	$5,000,000
Sales	$30,000,000
Cost of Goods Sold	$18,000,000
Operating Expenses	$8,000,000

1. Determine how much of the R&D costs should be expensed.
2. Calculate the impact on net income if all R&D costs are expensed.
3. Discuss the effect of expensing R&D costs on Pfizer’s profitability.
4. Explain the rationale for expensing R&D costs under the Conservatism Principle.