How Well Target Corporations 10-K or Annual Report Follow the Guidance in the FASBs Concept Statement No. 8
FASB’s Concept Statement No. 8 discusses the framework companies should follow in financial reporting. One of the guidelines in concept statement No.8 requires organizations to provide information about their cash inflows, their resources, and how the organization effectively and efficiently manages its operations to potential and existing investors and other creditors (Financial Accounting Standards Board, 2018). Target Corporation’s 10-K report follows this guideline by disclosing information about its market risk, management’s discussion and analysis of its financial condition and operation results, financial statements and supplementary data, changes in and disagreements with accountants on financial and accounting disclosure, and controls and procedures. According to the 10-K report, the corporation effectively and efficiently managed its operations to potential and existing investors and other creditors by adopting a strategy designed to enhance sustainable profit growth and sales. One of the measures the corporation took to implement the strategy was expanding supply chain capacity and digital fulfillment capabilities, including adding one new distribution center and six new sortation centers to support the organization’s growth and commitment to fast delivery times (Target Corporation, 2023). The second measure was fulfilling more than 50% of the corporation’s digital sales by implementing same-day delivery. The third measure was opening 23 new stores on college campuses and key urban centers. The 10-K report also outlines the corporation’s operating cash flows and capital allocation.
The second guideline in concept statement No.8 requires organizations to provide information about their financial position, including the impacts of transactions and other events that impact their economic resources (Financial Accounting Standards Board, 2018). Target Corporation follows this guideline by explaining the corporation’s financial position based on critical accounting estimates. One of the items reviewed in the critical accounting estimates is the corporation’s inventory and cost of sales. According to the 10-K report, Target Corporation’s inventory was $13.5 billion by 28th January 2023. The second item is vendor income. The 10-K report indicates that Target Corporation’s vendor income was $526 million by 28th January 2023. The third item is long-lived assets. The 10-K report indicates that the long-lived assets reduced to $66 million in 2022. The third item is income taxes (Target Corporation, 2023). The 10-K report indicates that Target Corporation paid $241 million in income taxes by 28th January 2023. The 10-K report also outlines the company’s financial position by discussing forward-looking statements. The principal forward-looking statements in the 10-K report include the company’s financial performance, debt maturities funding, statements regarding the costs and adequacy associated with the company’s liquidity sources, expected compliance with debt covenants, execution of the company’s share repurchase program, intentions regarding future dividends, expected impact of the new accounting pronouncements, expected contributions and payments related to the company’s pension plan, expected recognition and timing of compensation expenses and the expected return on assets (Target Corporation, 2023). The report also discusses the market risks that could impact the company’s profitability.
The third guideline in concept statement No.8 requires organizations to provide information about payment requirements and priorities for the existing claims to help those reviewing the financial report predict how the organization will distribute future cash flows (Financial Accounting Standards Board, 2018). Target Corporation’s 10-K report follows this guideline by providing information about its capital expenditures. The expenditures include investments in existing stores, new stores, supply chains, and information technology. According to the report, Target Corporation’s capital expenditures increased in 2022 because of its strategic initiatives. The report also discusses Target Corporation’s expected capital expenditures in 20233. Based on the report, Target Corporation’s capital expenditures are expected to increase in 2023 by $1.0 billion because of the new store models, supply chain projects, and new stores (Target Corporation, 2023). The report also reviews the costs incurred in paying dividends. For example, the report indicates that Target Corporation paid dividends amounting to $1.8 billion in 2022 (Target Corporation, 2023). Therefore, investors can predict the company’s future payments based on dividend payments and capital expenditures. The report also discusses the accounting policies for preparing the consolidated financial statements. The policies are classified into consolidation, organization, use of estimates, fiscal year, and accounting policies (Target Corporation, 2023). The accounting policies relate to the applicable notes of the consolidated financial statements.
The fourth guideline in concept statement No.8 requires organizations to provide financial statements to help creditors and investors understand their financial performance (Financial Accounting Standards Board, 2018). Target Corporation’s 10-K report provides the company’s financial statements indicating the company’s financial performance over the past three years. One of the financial statements provided in the report is the consolidated statements of operations. The statements indicate the company’s sales, revenue, operating income, interest expense, earnings before income taxes, provision for income taxes, and earnings per share. The second financial statement is a consolidated statement of comprehensive income. The statement indicates the company’s net earnings, pension benefit liabilities, and comprehensive income. The third financial statement is a consolidated statement of financial position. The statements indicate the company’s assets and liabilities. The fourth financial statement is a consolidated statement of cash flows. The statements indicate the company’s operating activities. The fifth financial statement is a consolidated statement of shareholders’ investments. The statement indicates the company’s net earnings, stock repurchase, dividends, and stock awards and options.
References
Financial Accounting Standards Board. (2018). Statement of Financial Accounting Concepts No. 8. FASB Home. https://fasb.org/Page/ShowPdf?path=Concepts%2BStatement%2B8%2BChapter%2B3%2BAs%2BAmended.pdf&title=CONCEPTS%2BSTATEMENT%2BNO.%2B8%E2%80%94CONCEPTUAL%2BFRAMEWORK%2BFOR%2BFINANCIAL%2BREPORTING%E2%80%94CHAPTER%2B3%2C%2BQUALITATIVE%2BCHARACTERISTICS%2BOF%2BUSEFUL%2BFINANCIAL%2BINFORMATION%2B%28AS%2BAMENDED%29&acceptedDisclaimer=true&Submit=
Target Corporation. (2023). Target corporation – 10K – annual report – March 08, 2023 – Fintel. https://fintel.io/doc/sec-target-corp-27419-10k-2023-march-08-19424-4599
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Write a three-page paper on Target or McDonald’s company, and compare the selected corporation’s most recent 10-K or annual report to the Financial Accounting Standards Board’s (FASB’s) Concepts statement no. 8 (see reference below). Analyze and report on how well your corporation’s 10-K or annual report follows the guidance in the FASB’s Concept Statement No. 8.
How Well Target Corporations 10-K or Annual Report Follow the Guidance in the FASBs Concept Statement No. 8
***The paper is only to have two references (i.e., your corporation’s 10-K or annual report plus the FASB’s concept statement no. 8). ****
Use the written assignment format that you can access by clicking on the link below. Be sure to format the paper in APA 7th edition format. The Writing Studio has APA Style tutorials that can help you along with careful use of your personal copy of the APA Style manual 7th edition.
Financial Accounting Standards Board (FASB). (2021, December as amended). Concepts statement no. 8—Conceptual framework for financial reporting—Chapter 1, the objective of general purpose financial reporting. Available at https://fasb.org/page/PageContent?pageId=/standards/concepts-statements.html
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