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Question: Target adopted the new leasing standard for

Target adopted the new leasing standard for the year ended February 2, 2019, using themodified retrospective approach outlined in ASC Topic 842. All questions relate to the yearended February 2, 2019 (fiscal 2018) unless stated otherwise. The supplemental informationfor the fiscal 2018 statement of cash flows reports that $130 of leased assets were obtained inexchange for new finance lease liabilities, and $246 of leased assets were obtained in exchangefor new operating lease liabilities. Presented below is information from Target Corporation’s Form 10-K, Note 18, for the yearended February 2, 2019.
Target adopted the new leasing standard for the year ended February 2, 2019, using themodified retrospective approach outlined in ASC Topic 842. All questions relate to the yearended February 2, 2019 (fiscal 2018) unless stated otherwise. The supplemental informationfor the fiscal 2018 statement of cash flows reports that $130 of leased assets were obtained inexchange for new finance lease liabilities, and $246 of leased assets were obtained in exchangefor new operating lease liabilities. Presented below is information from Target Corporation’s Form 10-K, Note 18, for the yearended February 2, 2019. (a) Finance lease assets are recorded net of accumulated amortization of $371 million and $317 million as of February 2, 2019,and February 3, 2018, respectively. Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the informationavailable at commencement date in determining the present value of lease payments. We use the incremental borrowing rateon January 31, 2016, for operating leases that commenced prior to that date. (a) Includes short-term leases and variable lease costs, which are immaterial. (b) Supply chain-related amounts are included in Cost of Sales. (c) Sublease income excludes rental income from owned properties of $47 million for 2018, 2017, and 2016, which is includedin Other Revenue. (a) Operating lease payments include $778 million related to options to extend lease terms that are reasonably certain ofbeing exercised and exclude $341 million of legally binding minimum lease payments for leases signed but not yetcommenced. (b) Finance lease payments include $127 million related to options to extend lease terms that are reasonably certain of beingexercised and exclude $193 million of legally binding minimum lease payments for leases signed but not yet commenced. Required: All questions relate to fiscal 2018 unless stated otherwise. 1. Solve for the unknowns (A through F). 2. Explain how adopting ASC Topic 842 changed Target’s balance sheet at February 4, 2018(the first day of the 2018 fiscal year). 3. Explain why the amount of Operating Lease Assets differs from the amount of total Operating lease liabilities. 4. Explain why the amount of Buildings and Improvements, net of Accumulated Depreciation differs from the total amount of Finance lease liabilities. 5. Show how the fiscal 2018 income statement would change if the operating leases weretreated as finance leases. 6. Show how the fiscal 2018 statement of cash flows would change if the operating leaseswere treated as finance leases. 7. Show how the February 2, 2019, balance sheet would change if the operating leases weretreated as finance leases.

Target adopted the new leasing standard for the year ended February 2, 2019, using themodified retrospective approach outlined in ASC Topic 842. All questions relate to the yearended February 2, 2019 (fiscal 2018) unless stated otherwise. The supplemental informationfor the fiscal 2018 statement of cash flows reports that $130 of leased assets were obtained inexchange for new finance lease liabilities, and $246 of leased assets were obtained in exchangefor new operating lease liabilities. Presented below is information from Target Corporation’s Form 10-K, Note 18, for the yearended February 2, 2019. (a) Finance lease assets are recorded net of accumulated amortization of $371 million and $317 million as of February 2, 2019,and February 3, 2018, respectively. Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the informationavailable at commencement date in determining the present value of lease payments. We use the incremental borrowing rateon January 31, 2016, for operating leases that commenced prior to that date. (a) Includes short-term leases and variable lease costs, which are immaterial. (b) Supply chain-related amounts are included in Cost of Sales. (c) Sublease income excludes rental income from owned properties of $47 million for 2018, 2017, and 2016, which is includedin Other Revenue. (a) Operating lease payments include $778 million related to options to extend lease terms that are reasonably certain ofbeing exercised and exclude $341 million of legally binding minimum lease payments for leases signed but not yetcommenced. (b) Finance lease payments include $127 million related to options to extend lease terms that are reasonably certain of beingexercised and exclude $193 million of legally binding minimum lease payments for leases signed but not yet commenced. Required: All questions relate to fiscal 2018 unless stated otherwise. 1. Solve for the unknowns (A through F). 2. Explain how adopting ASC Topic 842 changed Target’s balance sheet at February 4, 2018(the first day of the 2018 fiscal year). 3. Explain why the amount of Operating Lease Assets differs from the amount of total Operating lease liabilities. 4. Explain why the amount of Buildings and Improvements, net of Accumulated Depreciation differs from the total amount of Finance lease liabilities. 5. Show how the fiscal 2018 income statement would change if the operating leases weretreated as finance leases. 6. Show how the fiscal 2018 statement of cash flows would change if the operating leaseswere treated as finance leases. 7. Show how the February 2, 2019, balance sheet would change if the operating leases weretreated as finance leases.
(a) Finance lease assets are recorded net of accumulated amortization of $371 million and $317 million as of February 2, 2019,and February 3, 2018, respectively. Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the informationavailable at commencement date in determining the present value of lease payments. We use the incremental borrowing rateon January 31, 2016, for operating leases that commenced prior to that date.
Target adopted the new leasing standard for the year ended February 2, 2019, using themodified retrospective approach outlined in ASC Topic 842. All questions relate to the yearended February 2, 2019 (fiscal 2018) unless stated otherwise. The supplemental informationfor the fiscal 2018 statement of cash flows reports that $130 of leased assets were obtained inexchange for new finance lease liabilities, and $246 of leased assets were obtained in exchangefor new operating lease liabilities. Presented below is information from Target Corporation’s Form 10-K, Note 18, for the yearended February 2, 2019. (a) Finance lease assets are recorded net of accumulated amortization of $371 million and $317 million as of February 2, 2019,and February 3, 2018, respectively. Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the informationavailable at commencement date in determining the present value of lease payments. We use the incremental borrowing rateon January 31, 2016, for operating leases that commenced prior to that date. (a) Includes short-term leases and variable lease costs, which are immaterial. (b) Supply chain-related amounts are included in Cost of Sales. (c) Sublease income excludes rental income from owned properties of $47 million for 2018, 2017, and 2016, which is includedin Other Revenue. (a) Operating lease payments include $778 million related to options to extend lease terms that are reasonably certain ofbeing exercised and exclude $341 million of legally binding minimum lease payments for leases signed but not yetcommenced. (b) Finance lease payments include $127 million related to options to extend lease terms that are reasonably certain of beingexercised and exclude $193 million of legally binding minimum lease payments for leases signed but not yet commenced. Required: All questions relate to fiscal 2018 unless stated otherwise. 1. Solve for the unknowns (A through F). 2. Explain how adopting ASC Topic 842 changed Target’s balance sheet at February 4, 2018(the first day of the 2018 fiscal year). 3. Explain why the amount of Operating Lease Assets differs from the amount of total Operating lease liabilities. 4. Explain why the amount of Buildings and Improvements, net of Accumulated Depreciation differs from the total amount of Finance lease liabilities. 5. Show how the fiscal 2018 income statement would change if the operating leases weretreated as finance leases. 6. Show how the fiscal 2018 statement of cash flows would change if the operating leaseswere treated as finance leases. 7. Show how the February 2, 2019, balance sheet would change if the operating leases weretreated as finance leases.
(a) Includes short-term leases and variable lease costs, which are immaterial. (b) Supply chain-related amounts are included in Cost of Sales. (c) Sublease income excludes rental income from owned properties of $47 million for 2018, 2017, and 2016, which is includedin Other Revenue.
Target adopted the new leasing standard for the year ended February 2, 2019, using themodified retrospective approach outlined in ASC Topic 842. All questions relate to the yearended February 2, 2019 (fiscal 2018) unless stated otherwise. The supplemental informationfor the fiscal 2018 statement of cash flows reports that $130 of leased assets were obtained inexchange for new finance lease liabilities, and $246 of leased assets were obtained in exchangefor new operating lease liabilities. Presented below is information from Target Corporation’s Form 10-K, Note 18, for the yearended February 2, 2019. (a) Finance lease assets are recorded net of accumulated amortization of $371 million and $317 million as of February 2, 2019,and February 3, 2018, respectively. Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the informationavailable at commencement date in determining the present value of lease payments. We use the incremental borrowing rateon January 31, 2016, for operating leases that commenced prior to that date. (a) Includes short-term leases and variable lease costs, which are immaterial. (b) Supply chain-related amounts are included in Cost of Sales. (c) Sublease income excludes rental income from owned properties of $47 million for 2018, 2017, and 2016, which is includedin Other Revenue. (a) Operating lease payments include $778 million related to options to extend lease terms that are reasonably certain ofbeing exercised and exclude $341 million of legally binding minimum lease payments for leases signed but not yetcommenced. (b) Finance lease payments include $127 million related to options to extend lease terms that are reasonably certain of beingexercised and exclude $193 million of legally binding minimum lease payments for leases signed but not yet commenced. Required: All questions relate to fiscal 2018 unless stated otherwise. 1. Solve for the unknowns (A through F). 2. Explain how adopting ASC Topic 842 changed Target’s balance sheet at February 4, 2018(the first day of the 2018 fiscal year). 3. Explain why the amount of Operating Lease Assets differs from the amount of total Operating lease liabilities. 4. Explain why the amount of Buildings and Improvements, net of Accumulated Depreciation differs from the total amount of Finance lease liabilities. 5. Show how the fiscal 2018 income statement would change if the operating leases weretreated as finance leases. 6. Show how the fiscal 2018 statement of cash flows would change if the operating leaseswere treated as finance leases. 7. Show how the February 2, 2019, balance sheet would change if the operating leases weretreated as finance leases.
(a) Operating lease payments include $778 million related to options to extend lease terms that are reasonably certain ofbeing exercised and exclude $341 million of legally binding minimum lease payments for leases signed but not yetcommenced. (b) Finance lease payments include $127 million related to options to extend lease terms that are reasonably certain of beingexercised and exclude $193 million of legally binding minimum lease payments for leases signed but not yet commenced.
Target adopted the new leasing standard for the year ended February 2, 2019, using themodified retrospective approach outlined in ASC Topic 842. All questions relate to the yearended February 2, 2019 (fiscal 2018) unless stated otherwise. The supplemental informationfor the fiscal 2018 statement of cash flows reports that $130 of leased assets were obtained inexchange for new finance lease liabilities, and $246 of leased assets were obtained in exchangefor new operating lease liabilities. Presented below is information from Target Corporation’s Form 10-K, Note 18, for the yearended February 2, 2019. (a) Finance lease assets are recorded net of accumulated amortization of $371 million and $317 million as of February 2, 2019,and February 3, 2018, respectively. Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the informationavailable at commencement date in determining the present value of lease payments. We use the incremental borrowing rateon January 31, 2016, for operating leases that commenced prior to that date. (a) Includes short-term leases and variable lease costs, which are immaterial. (b) Supply chain-related amounts are included in Cost of Sales. (c) Sublease income excludes rental income from owned properties of $47 million for 2018, 2017, and 2016, which is includedin Other Revenue. (a) Operating lease payments include $778 million related to options to extend lease terms that are reasonably certain ofbeing exercised and exclude $341 million of legally binding minimum lease payments for leases signed but not yetcommenced. (b) Finance lease payments include $127 million related to options to extend lease terms that are reasonably certain of beingexercised and exclude $193 million of legally binding minimum lease payments for leases signed but not yet commenced. Required: All questions relate to fiscal 2018 unless stated otherwise. 1. Solve for the unknowns (A through F). 2. Explain how adopting ASC Topic 842 changed Target’s balance sheet at February 4, 2018(the first day of the 2018 fiscal year). 3. Explain why the amount of Operating Lease Assets differs from the amount of total Operating lease liabilities. 4. Explain why the amount of Buildings and Improvements, net of Accumulated Depreciation differs from the total amount of Finance lease liabilities. 5. Show how the fiscal 2018 income statement would change if the operating leases weretreated as finance leases. 6. Show how the fiscal 2018 statement of cash flows would change if the operating leaseswere treated as finance leases. 7. Show how the February 2, 2019, balance sheet would change if the operating leases weretreated as finance leases.

Target adopted the new leasing standard for the year ended February 2, 2019, using themodified retrospective approach outlined in ASC Topic 842. All questions relate to the yearended February 2, 2019 (fiscal 2018) unless stated otherwise. The supplemental informationfor the fiscal 2018 statement of cash flows reports that $130 of leased assets were obtained inexchange for new finance lease liabilities, and $246 of leased assets were obtained in exchangefor new operating lease liabilities. Presented below is information from Target Corporation’s Form 10-K, Note 18, for the yearended February 2, 2019. (a) Finance lease assets are recorded net of accumulated amortization of $371 million and $317 million as of February 2, 2019,and February 3, 2018, respectively. Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the informationavailable at commencement date in determining the present value of lease payments. We use the incremental borrowing rateon January 31, 2016, for operating leases that commenced prior to that date. (a) Includes short-term leases and variable lease costs, which are immaterial. (b) Supply chain-related amounts are included in Cost of Sales. (c) Sublease income excludes rental income from owned properties of $47 million for 2018, 2017, and 2016, which is includedin Other Revenue. (a) Operating lease payments include $778 million related to options to extend lease terms that are reasonably certain ofbeing exercised and exclude $341 million of legally binding minimum lease payments for leases signed but not yetcommenced. (b) Finance lease payments include $127 million related to options to extend lease terms that are reasonably certain of beingexercised and exclude $193 million of legally binding minimum lease payments for leases signed but not yet commenced. Required: All questions relate to fiscal 2018 unless stated otherwise. 1. Solve for the unknowns (A through F). 2. Explain how adopting ASC Topic 842 changed Target’s balance sheet at February 4, 2018(the first day of the 2018 fiscal year). 3. Explain why the amount of Operating Lease Assets differs from the amount of total Operating lease liabilities. 4. Explain why the amount of Buildings and Improvements, net of Accumulated Depreciation differs from the total amount of Finance lease liabilities. 5. Show how the fiscal 2018 income statement would change if the operating leases weretreated as finance leases. 6. Show how the fiscal 2018 statement of cash flows would change if the operating leaseswere treated as finance leases. 7. Show how the February 2, 2019, balance sheet would change if the operating leases weretreated as finance leases.
Required: All questions relate to fiscal 2018 unless stated otherwise. 1. Solve for the unknowns (A through F). 2. Explain how adopting ASC Topic 842 changed Target’s balance sheet at February 4, 2018(the first day of the 2018 fiscal year). 3. Explain why the amount of Operating Lease Assets differs from the amount of total Operating lease liabilities. 4. Explain why the amount of Buildings and Improvements, net of Accumulated Depreciation differs from the total amount of Finance lease liabilities. 5. Show how the fiscal 2018 income statement would change if the operating leases weretreated as finance leases. 6. Show how the fiscal 2018 statement of cash flows would change if the operating leaseswere treated as finance leases. 7. Show how the February 2, 2019, balance sheet would change if the operating leases weretreated as finance leases.

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> Trask Corporation (a fictional company) had the following shareholders’ equity account balances at December 31, 20X0: Transactions during 20X1 and other information relating to the shareholders’ equity accounts follow:

> Kadri Corporation (a fictional company) reported basic EPS of $3.00 and diluted EPS of $2.40 for 20X1. Its EPS calculations follow: Kadri issued the convertible preferred stock at the beginning of 20X1 and the Series A and Series B convertible debt at pa

> Hanigan Manufacturing (a fictional company) had 1,800,000 shares of common stock Outstanding as of January 1, 20X1, and 900,000 shares of 10% noncumulative (nonconvertible) preferred stock outstanding. The following events occurred during 20X1: • On Febr

> Information from the annual report of Hicks Company (a fictional company) to shareholders follows: Required: 1. Suppose that the increase in the preferred stock account was due to the issuance of new preferred shares at par on January 1, 20X2. What journ

> Craig Incorporated (a fictional company) manufactures and sells security systems. Selected information from the company’s 20X3 financial statements show: On December 31, 20X1, Craig Incorporated bought back 1,237,000 shares of common st

> Locate the Form 10-K for the year ended December 31, 2018, for Southwest Airlines Co. You can find it at http://investors.southwest.com/financials/sec-filings. 1. What is Southwest Airlines’ main business? 2. List some of the nonfinancial metrics that S

> In recent years, investors, creditors, governments, and the public have demanded more information from companies about climate change. Required: 1 Why have investors and creditors become interested in business activities related to climate change? 2. Wh

> Locate the 2018 Sustainability Information report for Siemens AG, the German manufacturing conglomerate,athttps://www.siemens.com/investor/pool/en/investor_relations/siemens_sustainability_ information2018.pdf. Required: 1. What are the main areas for w

> As a senior partner at one of the nation’s largest public accounting firms, you serve as chair ofthe firm’s financial reporting policy committee. You are also the firm’s chief spokesperson onfinancial reporting matters that come before the FASB and the S

> Krewatch, Inc., is a vertically integrated manufacturer and retailer of golf clubs and accessories (gloves, shoes, bags, etc.). Krewatch maintains separate financial reporting systems for each of its facilities. The company experienced the following even

> Presented below is a combined single-step income and retained earnings statement for Hardrock Mining Co. for 20X1. Additional facts gleaned from notes to Hardrock’s financial statements follow (dollar amounts in thousands): a. Other, ne

> The following information is provided for Kelly Plumbing Supply. Cash received from customers during December 20X1 $387,000 Cash paid to suppliers for inventory during December 20X1 131,000 Cash received from customers includes all $139,000 of the accoun

> Under Hart Company’s accounting system, all insurance premiums paid are debited to prepaid insurance. Hart then makes monthly charges to Insurance expense with credits to prepaid insurance as the insurance coverage period is used up. Additional informati

> Joel Hamilton, D.D.S., keeps his accounting records on the cash basis. During 20X1, he collected $200,000 in fees from his patients. At December 31, 20X0, Dr. Hamilton had accounts receivable of $18,000 and no liability for deferred fee revenue. At Decem

> In November and December 20X1, Gee Company, a newly organized magazine publisher, received $36,000 for 1,000 three-year subscriptions at $12 per year, starting with the January 20X2 issue of the magazine. Required: How much should Gee report in its 20X1

> On January 1, 20X1, Hardy, Inc., purchased certain plant assets under a deferred paymentcontract. The agreement called for making annual payments of $10,000 for five years. The firstpayment is due on January 1, 20X1, and the remaining payments are due on

> Samson Manufacturing Company, a calendar-year company, purchased a machine for $65,000on January 1, 20X0. At the date of purchase, Samson incurred the following additional costs: The machine’s estimated salvage value was $5,000, and Sam

> Apex Company purchased a tooling machine on January 3, 20W1, for $30,000. The machinewas being depreciated on the straight-line method over an estimated useful life of 20 years, withno salvage value. At the beginning of 20X1, when the machine had been in

> On April 1, 20X1, Mills Company acquired equipment for $125,000. The estimated useful lifeis six years, and the estimated residual value is $5,000. Mills estimates that the equipment canproduce 25,000 units of product. During 20X1 and 20X2, respectively,

> For several years, the Securities and Exchange Commission (SEC) has been considering whether to transition U.S. firms to International Financial Reporting Standards (IFRS) for filing public financial reports. During 2011, Matthew J. Foehr, the vice presi

> Gonzo Co. owns a building in Georgia. The building’s historical cost is $970,000, and $440,000of accumulated depreciation has been recorded to date. During 20X1, Gonzo incurred the following expenses related to the building: Required:

> On July 1, 20X1, Ritz Company signs a contract with Venticello, Inc., to install Ritz’sinventory management software throughout Venticello, Inc. Ritz will begin the installation immediately and expectsto compete the installation in thre

> In January 20X1, Vorst Company purchased a mineral mine for $2,640,000. Removable orewas estimated at 1,200,000 tons. After it has extracted all the ore, Vorst will be required by lawto restore the land to its original condition. The expected present val

> Pearl, Inc., develops and markets computer software. During 20X0, one of Pearl’s engineersbegan developing a new and very innovative software product. On July 1, 20X1, a team of Pearlengineers determined that the software product was te

> In 20X1, Ball Labs incurred the following costs: Required: What was Ball’s total research and development expense in 20X1?

> During 20X1, Orr Company incurred the following costs: Required: How much research and development expense should Orr report in 20X1?

2.99

See Answer


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