Net of estimated breakage. Guests receive a 5 percent discount on nearly all purchases and receive free ahipping at Target com when they use their Target Debit Card, Target Credit Card, or Target MasterCard (RedCards). Target Circle program members eam 1 percent rewards on nearly all non-RedCard purchaces. As of January 29, 2022 , and January 30,2021 , deferred revenue of $89 million and $72 million, respectively, related to this loyalty program was included in Accrued and Other Current Liabilities. Credit card profit sharing - We receive payments under a credit card program agreement with TD. Under the agreement, we receive a percentage of the profits generated by the Target Credit Card and Target MasterCard receivables in exchange for performing account servicing and primary marketing functions. TD underwrites, funds, and owns Target Credit Card and Target MasterCard receivables, controls risk management policies, and oversees regulatory compliance. Other - Includes advertising, Shipt membership and service revenues, commissions earned on third-party sales through Target.com, rental income, and other miscellanequs revenues. 5. Cost of Sales and Selfing, Gerreral and Adimili istrafive Experises Note: The olassification of these expenses varies across the retail industry. Guests receive a 5 percent discount on nearly all purchases and receive free shipping at Target.com when they use their Target Debit Card, Target Credit Card, or Target MasterCard (RedCards). Target Circle program members eam 1 percent rewards on nearly all non-RedCard purchases. As of January 29 , 2022 , and January 30,2021 , deferred revenue of $89 million and $72 million, respectively, related to this loyalty program was included in Accrued and Other Current Liabilities. Credit card profit shaning - We receive payments under a credit card program agreement with TD. Under the agreement, we receive a percentage of the profits generated by the Target Credit Card and Target MasterCard receivables in exchange for performing account servicing and primary marketing functions. TD underwrites, funds, and owns Target Credit Card and Target MasterCard receivables, controls risk management policies, and oversees regulatory compliance. Other - Includes advertising, Shipt membership and service revenues, commissions earned on third-party sales through Target.com, rental income, and other miscellaneous revenues. 5. Cost of Sales and Selling, General and Administrative Expenses Note: The classification of these expenses varies across the retail industry. Cash equivalents include highly liquid investments with an original maturity of three months or less from the time of purchase. Cash equivalents also include amounts due from third-party financial institutions for credit and debit card transactions. These receivables tvoically settle in five davs or less. As of January 29, 2022, and January 30, 2021, we reclassified book overdrafts of $366 million and $240 million, respectively, to Accounts Payable and \$19 million and \$24 million, respectively, to Accrued and Other Current Liabilities. 10. Inventory The vast majority of our inventory is accounted for under the retail inventory accounting method (RIM) using the last-in, first-out (LIFO) method. Inventory is stated at the lower of LIFO cost or market. Inventory cost includes the amount we pay to our suppliers to acquire inventory, freight costs incurred to deliver product to our distribution centers and stores, and import costs, reduced by vendor income and cash discounts. Distribution center operating costs, including compensation and benefits, are expensed in the period incurred. Inventory is also reduced for estimated losses related to shrink and markdowns. The LIFO provision is calculated based on inventory levels, markup rates, and internally measured retail price indices. Under RIM, inventory cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the inventory retail value. RIM is an averaging method that has been widely used in the retail industry due to its practicality. The use of RIM will result in inventory being valued at the lower of cost or market because permanent markdowns are taken as a reduction of the retail value of inventory. 11. Other Current Assets We file a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions. The U.S. Internal Revenue Service (IRS) has completed exams on the U.S. federal income tax returns for years 2019 and prior. With few exceptions, we are no longer subject to state and local or non-U.S. income tax examinations by tax authorities for years before 2015. If we were to prevail on all unrecognized tax benefits recorded, $67 million of the $125 million reserve would benefit the effective tax rate, In addition, the reversal of accrued interest and penalties would also benefit the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. During 2021, 2020, and 2019, we recorded an expense / (benefit) from accrued interest and penalties of $1 million, $(12) million, and $(2) million, respectively. As of January 29, 2022, January 30,2021 , and February 1,2020 , total accrued interest and penalties were $13 million, $12 million, and $27 million, respectively. It is reasonably possible that the amount of the unrecognized tax benefits with respect to our other unrecognized tax positions will increase or decrease during the next twelve months; however, an estimate of the amount or range of the change cannot be made at this time. Property and equipment, including assets acquired under finance leases, is depreciated using the straight-line method over estimated useful lives or lease terms if shorter. We amortize leasehold improvements purchased after the beginning of the initial lease term over the shorter of the assets' useful lives or a term that includes the original lease term, plus any renewals that are reasonably certain at the date the leasehold improvements are acquired. Total depreciation expense, including depreciation expense included in Cost of Sales, was $2.6 billion, \$2.5 billion, and $2.6 billion for 2021,2020 , and 2019, respectively. For income tax purposes, accelerated depreciation methods are generally used. Repair and maintenance costs are expensed as incurred. Facility pre-opening costs, including supplies and payroll, are expensed as incurred. We review long-lived assets for impairment when store performance expectations, events, or changes in circumstances-such as a decision to relocate or close a store, office, or distribution center, discontinue a project, or make significant software changes-indicate that the asset's carrying value may not be recoverable. We recognized impairment losses of $87 million, $62 million, and $23 million during 2021, 2020, and 2019, respectively. For asset groups classified as held for sale, measurement of an impairment loss is based on the excess of the carrying amount of the asset group over its fair value. We estimate fair value by obtaining market appraisals, obtaining valuations from third-party brokers, or using other valuation techniques. Impairments are recorded in SG\&A Expenses. 13. Other Noncurrent Assets Goodwill totaled $631 million as of both January 29, 2022, and January 30, 2021. No impairments were recorded in 2021,2020 , or 2019 as a result of the annual goodwill impairment tests performed. (b) Note 23 provides more information on company-owned life insurance investments. Net of estimated breakage. Guests receive a 5 percent discount on nearly all purchases and receive free ahipping at Target com when they use their Target Debit Card, Target Credit Card, or Target MasterCard (RedCards). Target Circle program members eam 1 percent rewards on nearly all non-RedCard purchaces. As of January 29, 2022 , and January 30,2021 , deferred revenue of $89 million and $72 million, respectively, related to this loyalty program was included in Accrued and Other Current Liabilities. Credit card profit sharing - We receive payments under a credit card program agreement with TD. Under the agreement, we receive a percentage of the profits generated by the Target Credit Card and Target MasterCard receivables in exchange for performing account servicing and primary marketing functions. TD underwrites, funds, and owns Target Credit Card and Target MasterCard receivables, controls risk management policies, and oversees regulatory compliance. Other - Includes advertising, Shipt membership and service revenues, commissions earned on third-party sales through Target.com, rental income, and other miscellanequs revenues. 5. Cost of Sales and Selfing, Gerreral and Adimili istrafive Experises Note: The olassification of these expenses varies across the retail industry. Guests receive a 5 percent discount on nearly all purchases and receive free shipping at Target.com when they use their Target Debit Card, Target Credit Card, or Target MasterCard (RedCards). Target Circle program members eam 1 percent rewards on nearly all non-RedCard purchases. As of January 29 , 2022 , and January 30,2021 , deferred revenue of $89 million and $72 million, respectively, related to this loyalty program was included in Accrued and Other Current Liabilities. Credit card profit shaning - We receive payments under a credit card program agreement with TD. Under the agreement, we receive a percentage of the profits generated by the Target Credit Card and Target MasterCard receivables in exchange for performing account servicing and primary marketing functions. TD underwrites, funds, and owns Target Credit Card and Target MasterCard receivables, controls risk management policies, and oversees regulatory compliance. Other - Includes advertising, Shipt membership and service revenues, commissions earned on third-party sales through Target.com, rental income, and other miscellaneous revenues. 5. Cost of Sales and Selling, General and Administrative Expenses Note: The classification of these expenses varies across the retail industry. Cash equivalents include highly liquid investments with an original maturity of three months or less from the time of purchase. Cash equivalents also include amounts due from third-party financial institutions for credit and debit card transactions. These receivables tvoically settle in five davs or less. As of January 29, 2022, and January 30, 2021, we reclassified book overdrafts of $366 million and $240 million, respectively, to Accounts Payable and \$19 million and \$24 million, respectively, to Accrued and Other Current Liabilities. 10. Inventory The vast majority of our inventory is accounted for under the retail inventory accounting method (RIM) using the last-in, first-out (LIFO) method. Inventory is stated at the lower of LIFO cost or market. Inventory cost includes the amount we pay to our suppliers to acquire inventory, freight costs incurred to deliver product to our distribution centers and stores, and import costs, reduced by vendor income and cash discounts. Distribution center operating costs, including compensation and benefits, are expensed in the period incurred. Inventory is also reduced for estimated losses related to shrink and markdowns. The LIFO provision is calculated based on inventory levels, markup rates, and internally measured retail price indices. Under RIM, inventory cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the inventory retail value. RIM is an averaging method that has been widely used in the retail industry due to its practicality. The use of RIM will result in inventory being valued at the lower of cost or market because permanent markdowns are taken as a reduction of the retail value of inventory. 11. Other Current Assets We file a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions. The U.S. Internal Revenue Service (IRS) has completed exams on the U.S. federal income tax returns for years 2019 and prior. With few exceptions, we are no longer subject to state and local or non-U.S. income tax examinations by tax authorities for years before 2015. If we were to prevail on all unrecognized tax benefits recorded, $67 million of the $125 million reserve would benefit the effective tax rate, In addition, the reversal of accrued interest and penalties would also benefit the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. During 2021, 2020, and 2019, we recorded an expense / (benefit) from accrued interest and penalties of $1 million, $(12) million, and $(2) million, respectively. As of January 29, 2022, January 30,2021 , and February 1,2020 , total accrued interest and penalties were $13 million, $12 million, and $27 million, respectively. It is reasonably possible that the amount of the unrecognized tax benefits with respect to our other unrecognized tax positions will increase or decrease during the next twelve months; however, an estimate of the amount or range of the change cannot be made at this time. Property and equipment, including assets acquired under finance leases, is depreciated using the straight-line method over estimated useful lives or lease terms if shorter. We amortize leasehold improvements purchased after the beginning of the initial lease term over the shorter of the assets' useful lives or a term that includes the original lease term, plus any renewals that are reasonably certain at the date the leasehold improvements are acquired. Total depreciation expense, including depreciation expense included in Cost of Sales, was $2.6 billion, \$2.5 billion, and $2.6 billion for 2021,2020 , and 2019, respectively. For income tax purposes, accelerated depreciation methods are generally used. Repair and maintenance costs are expensed as incurred. Facility pre-opening costs, including supplies and payroll, are expensed as incurred. We review long-lived assets for impairment when store performance expectations, events, or changes in circumstances-such as a decision to relocate or close a store, office, or distribution center, discontinue a project, or make significant software changes-indicate that the asset's carrying value may not be recoverable. We recognized impairment losses of $87 million, $62 million, and $23 million during 2021, 2020, and 2019, respectively. For asset groups classified as held for sale, measurement of an impairment loss is based on the excess of the carrying amount of the asset group over its fair value. We estimate fair value by obtaining market appraisals, obtaining valuations from third-party brokers, or using other valuation techniques. Impairments are recorded in SG\&A Expenses. 13. Other Noncurrent Assets Goodwill totaled $631 million as of both January 29, 2022, and January 30, 2021. No impairments were recorded in 2021,2020 , or 2019 as a result of the annual goodwill impairment tests performed. (b) Note 23 provides more information on company-owned life insurance investments