-8- Ch 2 ASSIGNMENT 4 (5 points) You are the accounting manager for a start-up company investing in gene therapy. While hanging out at the water cooler one day you overhear a discussion from department heads in R&D and product management as to the treatment of various costs. Below are a few of the comments. Instructions: Complete the second column indicating how these costs should be reported and classified in the financial statements. In other words, should the expenditures be capitalized OR should they be charged as R&D Expense. How should this be reported and classified in the financial statements? # Comment "We just purchased some lab equipment that 1 will be used for our current research project, but we'll also be able to use the equipment for future projects 2. Just hired a new chief scientist to lead the gene therapy project, but we had to pay top dollar, his salary is over $400,000 3. "Our outside lawyers just sent us an invoice for $1.5M to help us file the patent on our new cancer drug 4. R&D Lab testing cost (all related to lab personnel) in March was over $2.5M. Much more than we anticipated 5. The cost of the new gene splicer was a shocker, we paid over $10M for this device, and it is only useful for this project