Procter & Gamble Data for the year ended December 31, 2023:

Item	Amount
Research and Development Costs	$12,000,000
Estimated Future Benefits	$8,000,000
Sales	$70,000,000
Cost of Goods Sold	$40,000,000
Operating Expenses	$18,000,000

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 Procter & Gamble’s profitability.
4. Explain the rationale for expensing R&D costs under the Conservatism Principle.
5. How should the company record the R&D expenses in its financial statements?