Assessing Research and Development Expenses Abbott Laboratories reports the following income statement, in...
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Accounting
Assessing Research and Development Expenses
Abbott Laboratories reports the following income statement, in partial form ($ millions):
Year ended December 31
2014
Net sales
$23,024
Cost of products sold
10,663
Amortization of intangible assets
643
Research and development*
1,570
Selling, general and administrative
6,843
Total operating cost and expenses
19,719
Operating earnings
$3,305
* including acquired in-process and collaborations R&D
a. Compute the percent of net sales that Abbott Laboratories spends on research and development (R&D).
Round answer to one decimal place (i.e., 0.1426 = 14.3%)
Answer%
b. Using the financial statement effects template, describe how the accounting for R&D expenditures affects Abbott Laboratories' balance sheet and income statement.
Enter answers in millions, as shown above. Use negative signs with answers, when appropriate.
Transaction
Cash Asset
+
Noncash Assets
-
Contra Assets
=
Liabilities
+
Contr. Capital
+
Earned Capital
Revenue
-
Expenses
=
Net income
R & D expenditures
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