Question

Please answer immediately. I will rate the answer a thumbs up for a correct answer.

I know the bottom three answers are: increase, decrease, decrease, but I'm not sure about part 2a.

Required information (The following information applies to the questions displayed below.] Target Corporation prepares its financial statements according to U.S. GAAP. Target's financial statements and disclosure notes for the year ended February 3, 2018, are available here. This material also is available under the Investor Relations link at the company's website (www.target.com). 2. Disclosure Note 2 discusses Target's accounting for gift card sales. Disclosure Note 18 indicates the amount of gift card liability that is recognized in Target's balance sheet. a. By how much did Target's gift card liability change between February 3, 2018, and January 28, 2017? (Enter your answers in millions (i.e. 5,000,000 should be entered as 5).) b. How would the following affect Target's gift card liability (indicate "increase," "decrease," or "no change" for each): i. Sale of a gift card ii. Redemption of a gift card (the holder using it to acquire goods or services) iii. Increase in breakage estimated for gift cards already sold million 2a. Change in Target's gift card liability 2b. i. Sale of a gift card ii. Redemption of a gift card (the holder using it to acquire goods or services) iii. Increase in breakage estimated for gift cards already sold Increase Decrease No change

Here are Target's financial statements and disclosure notes:

Answer 1

18. Accrued and Other Current Liabilities Accrued and Other Current Liabilities February 3, January 28, (millions) 2018 2017 Wages and benefits 1,209 $ 812 Gift card liability, net of estimated breakage 727 693 Real estate, sales, and other taxes payable 670 571 Dividends payable 336 334 Straight-line rent accrual() 291 271 Workers' compensation and general liability 141 141 Interest payable 67 71 Income tax payable 26 158 Other 787 686 Total $ 4,254 $ 3,737 Straight-line rent accrual represents the amount of operating lease rent expense recorded that exceeds cash payments. We retain a substantial portion of the risk related to general liability and workers' compensation claims. Liabilities associated with these losses include estimates of both claims filed and losses incurred but not yet reported. We estimate our ultimate cost based on analysis of historical data and actuarial estimates. General liability and workers' compensation liabilities are recorded at our estimate of their net present value.

Increase in Gift card liability, net of estimated breakage is 727 - 693 = 34 million

Look at Note 18 above