Analyzing PPE Accounts and Recording PPE Transactions, Including Discontinued Op

Question

Analyzing PPE Accounts and Recording PPE Transactions, Including Discontinued Operations The 2014 and 2013 income statements and balance sheets (asset section only) for Target Corporation follow, along with its footnote describing Target's accounting for property and equip- ment. Target's cash flow statement for fiscal 2014 reported capital expenditures of $1,786 million and disposal proceeds for property and equipment of $95 million. No gain or loss was reported on property and equipment disposals. In addition, Target acquired property and equipment through non-cash acquisitions not reported on the statement of cash flows. (Note some numbers were added to make the disclosure complete.) Consolidated Statements of Operations $ millions) Sales Credit card revenues . Total revenues Cost of sales. Selling, general and administrative expenses Credit card expenses 2014 2013 2012 $71,279 $71,96 1,341 73,301 50,568 14,643 467 2,044 (161) $72,618 71,279 50,039 14,465 14,676 2,129 1,996 (391) arnings from continuing operations before interest expense and income taxes... Net interest expense. Ear 5,170 1,049 5,740 684 882 nings from continuing operations before income taxes 3,653 1,204 2,449 (4,085) 4,121 1,427 2,694 (723) 5,056 1,741 3,315 (316) $ 2,999 Net earnings from continuing operations. Net (loss/earnings $(1,636) 1,971

Explanation / Answer

Requirement a Date Accounts title & Explanation Debit Credit Amount in $ (Millions) 1 Depreciation Expense 2108 Accumulated Depreciation 2108 To record the depreciation expense for 2014 2 Property, Plant and equipment (PPE) 1786 Cash 1786 To record the cash purchase of PPE (See Notes in Requirement b) 3 Cash 95 Accumulated depreciation 1068 Property, Plant and equipment (PPE) 1163 To record the disposal of PPE 4 Repair and maintenance costs 715 Cash 715 To record the repair and maintenance costs for 2014 5 Impairment and write-downs 124 Property, Plant and equipment (PPE) 124 To record the impairment and write-downs for 2014 Requirement b Estimation of amount of property and equipment that was acquired though non-cash transactions Net value of PPE as on January 31, 2015 25958 Add : Depreciation for the year 2108 Add : Disposal of PPE 1163 Add : impairment and write-downs 124 Less : accumulated depreciation on disposal 1068 Less : Net Value of PPE on February 1, 2014 26412 Addition during the year 1873 Less : Cash capital expenditure 1786 Non cash capital expenditure 87 T-Accounts have been prepared for your understanding PPE Beg. Balance 40478 1163 Disposal Cash Purchase 1786 124 Imapirment Non-Cash 87 41064 Ending balance 42351 42351 Accumulated depreciation 14066 Disposal 1068 2108 Depreciation expense Ending balance 15106 16174 16174

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