Question

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Chapter 6 Assignment (Adapted from ATC 6-1 in Text)

Use the Target Corporation Form 10-K to answer the following questions related to Target’s 2017 Fiscal Year. Note that Target’s Fiscal Year ends in late January or early February, so the 2017 Fiscal Year ends February 3, 2018. You will need to use the financial statements as well as notes to the financial statements to answer the questions. Show your calculations.

1. What method of depreciation does Target use? (Hint: Use Footnotes beginning on page 40)
2. What types of intangible assets does Target have? (Hint: Use Footnotes beginning on page 40)
3. What are the estimated lives that Target uses for the various types of long-term assets? (Hint: Use Footnotes beginning on page 40)
4. As of the end of FY 2017 and 2016, what is the original cost of Target's: Land; Buildings and improvements; and Fixtures and equipment? (Hint: Use Statement of Financial Position)
5. What was Target's depreciation expense and amortization expense, exclusive of amounts included in cost of sales for FY 2017 and FY 2016? (Hint: Use Statement of Operations)

Answer 1

Ans: Target Corporation

a) Method of depreciation does Target use.

Property and equipment is depreciated using the straight-line method over estimated useful lives or lease terms if shorter. They amortize leasehold improvements purchased after the beginning of the initial lease term over the shorter of the assets' useful lives or a term that includes the original lease term, plus any renewals that are reasonably assured at the date the leasehold improvements are acquired.

b) Types of intangible assets Target have is Goodwill and Intangible Assets

c) The estimated lives that Target uses for the various types of long-term assets

Estimated Useful Lives	Life (Years)
Buildings and improvements	8-39
Fixtures and equipment	2-15
Computer hardware and software	2-7

For Intangible Assets

They use the straight-line method to amortize leasehold acquisition costs primarily over 9 to 39 years and other definite-lived intangibles over 3 to 15 years.

d) The original cost of Target's: Land; Buildings and improvements; and Fixtures and equipment Amounts is $ in Millions

		28.Jan.2017	30.Jan.2016
	Land	6,106	6,125
	Buildings and improvements	27,611	27,059
	Fixtures and equipment	5,503	5,347
	Computer hardware and software	2,651	2,617

  

e) Target's depreciation expense and amortization expense, exclusive of amounts included in cost of sales for FY 2017 and FY 2016

For 2017 Depreciation and amortization $2,298 millions

For 2016 Depreciation and amortization $2,213 millions