Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material also is available under the Investor Relations link at the company’s website (www.target.com).

Required:
1. Target’s Consolidated Statement of Financial Position (its balance sheet) discloses its current assets and current liabilities.
a. What are the three components of Target’s current liabilities?
b. Are current assets sufficient to cover current liabilities? What is the current ratio for the year ended February 1, 2020? How does the ratio compare with the prior year?
2. Disclosure Note 2 discusses Target’s accounting for gift card sales.
a. By how much did Target’s gift card liability change between February 1, 2020, and February 2, 2019?
b. How would the following affect Target’s gift card liability (indicate “increase,” “decrease,” or “no change” for each):
i. Sale of a gift card
ii. Redemption of a gift card (the holder using it to acquire goods or services)
iii. Increase in breakage estimated for gift cards already sold
3. Disclosure Note 14 discusses Target’s accounting for contingencies. Is their approach appropriate?