Abbott Laboratories reports the following (summary) income statement.

a. Compute the percent of net sales that Abbott Laboratories spends on research and development (R\&D). Compare this level of expenditure with the percentages for other companies that are discussed in the Business Insight box. How would you assess the appropriateness of its \(R \& D\) expense level?

b. Describe how accounting for R\&D expenditures affects Abbott Laboratories' balance sheet and income statement.

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Year Ended December 31 ($ millions) Net sales..... Cost of products sold... Research and development* Selling, general and administrative Pretax operating earnings .... 2012 $39,874 (15,120) (4,610) (12,059) $ 8,085