The 2014 and 2013 income statements and balance sheets (assetsection only) for Target Corporation...

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Accounting

The 2014 and 2013 income statements and balance sheets (assetsection only) for Target Corporation follow, along with itsfootnote describing Target’s accounting for property andequip-ment. Target’s cash ?ow statement for ?scal 2014 reportedcapital expenditures of $1,786 million and disposal proceeds forproperty and equipment of $95 million. No gain or loss was reportedon property and equipment disposals. In addition, Target acquiredproperty and equipment through non-cash acquisitions not reportedon the statement of cash ?ows.
Consolidated Statements of Operations
($ millions)                                                                2014              2013               2012
Sales....................................................                        $72,618          $71,279                     $71,960
Credit card revenues.....................................                    —             —                    1,341
Total revenues...........................................            $72,618          $71,279            $73,301
Cost of sales.............................................                $51,278           $50,039           $50,568
Selling, general and administrative expenses ........$14,676           $14,465           $14,643
Credit card expenses.....................................           —                  —                       467
Depreciation andamortization............................     $2,129               $1,996            $2,044
Gain on receivablestransaction...........................       —                       (391)               (161)
Earnings from continuing operations beforeinterest
expense and income taxes ............................ $4,535             $5,170             $5,740
Net interest expense .....................................                 $882              $1,049                $684
Earnings from continuing operations before
income taxes .......................................... $3,653               $4,121          $45,056
Provision for income taxes................................           $1,204               $1,427           $1,741
Net earnings from continuing operations ..................$2,449              $2 ,694            $3,315
Discontinued operations, net of tax........................     (4,085)                (723)             (316)
Net(loss)/earnings.......................................               $(1,636)              $1,971          $2,999
Consolidated Statements of Financial Position (AssetSection Only)
($millions)                                                              January 31, 2015        February1, 2014
AssetsCash and cash equivalents, including
short-term investments of $1,520 and $3 . . . . . . . . . . . .. . . . $2,210                            $ 670
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 8,790                           8,278
Assets of discontinued operations . . . . . . . . . . . . . . .. . . . . . . . 1,333                              793
Other current assets . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .1,754                             1,832
Total current assets . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . 14,087                         11,573
Property and equipment
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 6,127                           6,143
Buildings and improvements . . . . . . . . . . . . . . . . . . .. . . . . . . . 26,614                           25,984
Fixtures and equipment . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 5,346                          5,199
Computer hardware and software. . . . . . . . . . . . . . . . .. . . . . 2,553                              2,395
Construction-in-progress. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .424 757
Accumulated depreciation. . . . . . . . . . . . . . . . . . . .. . . . . . .(15,106)                      (14,066)
Property and equipment, net . . . . . . . . . . . . . . . . . .. . . . . . .25,958                           26,412
Noncurrent assets of discontinued operations . . . . . . . . . .. . . .442                              5,461
Other noncurrent assets. . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . .917                               1,107
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .                  $41,404                         $44,553
12. Property and Equipment
Property and equipment is depreciated using the straight-linemethod over estimated useful lives or lease terms if shorter. Weamortize leasehold improvements purchased after the beginning ofthe initial lease term over the shorter of the assets’ useful livesor a term that includes the original lease term, plus any renewalsthat are reasonably assured at the date the leasehold improvementsare acquired. Depreciation expense for 2014, 2013 and 2012 was$2,108 million, $1,975 million and $2,027 million, respectively.For income tax pur-poses, accelerated depreciation methods aregenerally used. Repair and maintenance costs are expensed asincurred and were $715 million in 2014, $643 million in 2013, and$650 in 2012. Facility pre-opening costs, including supplies andpayroll, are expensed as incurred.
Estimated Useful Lives Life (in years)
Buildings and improvements. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 8-39
Fixtures and equipment . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 2-15
Computer hardware and software. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 2-7
Long-lived assets are reviewed for impairment when events orchanges in circumstances, such as a decision to relocate or close astore or make significant software changes, indicate that theasset’s carrying value may not be recoverable. For asset groupsclassified as held for sale, the carrying value is compared to thefair value less cost to sell. We estimate fair value by obtainingmarket appraisals, valuations from third party brokers or othervaluation techniques.
Impairments ($ millions)                                                     2014              2013              2012
Impairments included in segment SG&A..........................    $108                $58                $37
Unallocated impairments.........................................               16                   19                   —
Total impairments................................................               $124                $77               $37
a. Prepare journal entries to record the following for2014:
i. Depreciation expense
ii. Capital expenditures
iii. Disposal of property, plant, andequipment
iv. Repair and maintenance costs v. Impairments andwrite-downs (Assume that impairments and write-downs reduce theproperty and equipment account, rather than increasing accumulateddepreciation.)
b. Estimate the amount of property and equipment thatwas acquired through non-cash transactions.

Answer & Explanation Solved by verified expert

3.6 Ratings (562 Votes)

a Following are the required journal entries i Depreciation expense Depreciation Account Dr 2108 To Accumulated Depreciation Account Cr 2108 Since the amount of depreciation given in footnote is 2108 which is routed through accumulated depreciation account as shown in above financial position iiCapital expenditures BankCash Account Dr 1786 Suspense Account Dr 284 To Plant Equipment Account Cr 2070 Suspense account is created since exact source of non cash transaction can not See Answer

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Transcribed Image Text

In: AccountingThe 2014 and 2013 income statements and balance sheets (assetsection only) for Target Corporation follow,...The 2014 and 2013 income statements and balance sheets (assetsection only) for Target Corporation follow, along with itsfootnote describing Target’s accounting for property andequip-ment. Target’s cash ?ow statement for ?scal 2014 reportedcapital expenditures of $1,786 million and disposal proceeds forproperty and equipment of $95 million. No gain or loss was reportedon property and equipment disposals. In addition, Target acquiredproperty and equipment through non-cash acquisitions not reportedon the statement of cash ?ows.Consolidated Statements of Operations($ millions) 2014 2013 2012Sales.................................................... $72,618 $71,279 $71,960Credit card revenues..................................... — — 1,341Total revenues........................................... $72,618 $71,279 $73,301Cost of sales............................................. $51,278 $50,039 $50,568Selling, general and administrative expenses ........$14,676 $14,465 $14,643Credit card expenses..................................... — — 467Depreciation andamortization............................ $2,129 $1,996 $2,044Gain on receivablestransaction........................... — (391) (161)Earnings from continuing operations beforeinterest expense and income taxes ............................ $4,535 $5,170 $5,740Net interest expense ..................................... $882 $1,049 $684Earnings from continuing operations before income taxes .......................................... $3,653 $4,121 $45,056Provision for income taxes................................ $1,204 $1,427 $1,741Net earnings from continuing operations ..................$2,449 $2 ,694 $3,315Discontinued operations, net of tax........................ (4,085) (723) (316)Net(loss)/earnings....................................... $(1,636) $1,971 $2,999Consolidated Statements of Financial Position (AssetSection Only)($millions) January 31, 2015 February1, 2014AssetsCash and cash equivalents, includingshort-term investments of $1,520 and $3 . . . . . . . . . . . .. . . . $2,210 $ 670Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 8,790 8,278Assets of discontinued operations . . . . . . . . . . . . . . .. . . . . . . . 1,333 793Other current assets . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .1,754 1,832Total current assets . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . 14,087 11,573Property and equipmentLand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 6,127 6,143Buildings and improvements . . . . . . . . . . . . . . . . . . .. . . . . . . . 26,614 25,984Fixtures and equipment . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 5,346 5,199Computer hardware and software. . . . . . . . . . . . . . . . .. . . . . 2,553 2,395Construction-in-progress. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .424 757Accumulated depreciation. . . . . . . . . . . . . . . . . . . .. . . . . . .(15,106) (14,066)Property and equipment, net . . . . . . . . . . . . . . . . . .. . . . . . .25,958 26,412Noncurrent assets of discontinued operations . . . . . . . . . .. . . .442 5,461Other noncurrent assets. . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . .917 1,107Total assets . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . $41,404 $44,55312. Property and EquipmentProperty and equipment is depreciated using the straight-linemethod over estimated useful lives or lease terms if shorter. Weamortize leasehold improvements purchased after the beginning ofthe initial lease term over the shorter of the assets’ useful livesor a term that includes the original lease term, plus any renewalsthat are reasonably assured at the date the leasehold improvementsare acquired. Depreciation expense for 2014, 2013 and 2012 was$2,108 million, $1,975 million and $2,027 million, respectively.For income tax pur-poses, accelerated depreciation methods aregenerally used. Repair and maintenance costs are expensed asincurred and were $715 million in 2014, $643 million in 2013, and$650 in 2012. Facility pre-opening costs, including supplies andpayroll, are expensed as incurred.Estimated Useful Lives Life (in years)Buildings and improvements. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 8-39Fixtures and equipment . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 2-15Computer hardware and software. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 2-7Long-lived assets are reviewed for impairment when events orchanges in circumstances, such as a decision to relocate or close astore or make significant software changes, indicate that theasset’s carrying value may not be recoverable. For asset groupsclassified as held for sale, the carrying value is compared to thefair value less cost to sell. We estimate fair value by obtainingmarket appraisals, valuations from third party brokers or othervaluation techniques.Impairments ($ millions) 2014 2013 2012Impairments included in segment SG&A.......................... $108 $58 $37Unallocated impairments......................................... 16 19 —Total impairments................................................ $124 $77 $37a. Prepare journal entries to record the following for2014:i. Depreciation expenseii. Capital expendituresiii. Disposal of property, plant, andequipmentiv. Repair and maintenance costs v. Impairments andwrite-downs (Assume that impairments and write-downs reduce theproperty and equipment account, rather than increasing accumulateddepreciation.)b. Estimate the amount of property and equipment thatwas acquired through non-cash transactions.