Question 2. (30 points). What is the effect of the choice of the following accounting policies on Companys net income, ROE, leverage ratio, total assets. Indicate next to the items whether they will be higher, unchanged or lower, if the indicated policy is adopted.

1. Capitalizing development portion of R&D, instead of expensing it:

a. Net Income

b. ROE

c. Leverage Ratio

d. Total Assets

2. Structuring leases as operating leases rather than finance leases:

a. Net Income

b. ROE

c. Leverage Ratio

d. Total Assets