P8-38. Analyzing PPE Accounts and Recording PPE Transactions, Including Discontinued Operations The 2018 and 2017 income statements and balance sheets (asset section only) for Target Corporation follow, along with its footnote describing Target's accounting for property and equipment. Target's cash flow statement for fiscal 2018 reported capital expenditures of $3,516 million and disposal proceeds for property and equipment of $85 million. No gain or loss was reported on property and equipment disposals. In addition, Target acquired property and equipment through non-cash acqui- sitions not reported on the statement of cash flows. Consolidated Statements of Operations ($ millions) Sales.... Other revenue. 2018 2017 $74,433 $71,786 923 928 Total revenues 75,356 72,714 Cost of sales. 53,299 51,125 Selling, general and administrative expenses 15,723 pg. 403 40 Depreciation and amortization 2,224 2,225 Operating income. 4,110 4,224 Net interest expense. 461 653 Other (income) expense.. (27) (59) Earnings from continuing operations before income taxes. 3,676 3,630 Provision for income taxes. . 746 722 Net earnings from continuing operations 2,930 Discontinued operations, net of tax 2,908 6 Net (loss)/earnings. . . $ 2,937 $ 2,914 Consolidated Statements of Financial Position (Asset Section Only) ($ millions) February 2, 2019 February 3, 2018 Assets Cash and cash equivalents $ 1,556 $ 2,643 Inventory. 9,497 8,597 Other current assets. 1,466 1,300 Total current assets. . 12,519 12,540 Property and equipment Land. 6,064 6,095 Buildings and improvements. 29,240 28,131 Fixtures and equipment 5,912 5,623 Computer hardware and software. 2,544 2,645 Construction-in-progress. 460 440 Accumulated depreciation. (18,687) (18,398) Property and equipment, net. 25,533 24,536 Other noncurrent assets. Total assets. . . 3,238 3,227 $41,290 $40,303 11. Property and Equipment Property and equipment 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 assured at the date the leasehold improvements are acquired. Depreciation expense for 2018, 2017 and 2016 was $2,460 million, $2,462 million, and $2,305 million, respectively, including de- preciation expense included in Cost of Sales. 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 events or changes in circumstances-such as a decision to relocate or close a store or distribution center, make significant software changes or discontinue projects-indicate that the asset's carrying value may not be recoverable. We recognized impairment losses of $92 million, $91 million, and $43 million during 2018, 2017, and 2016, respectively. . . . Impairments are recorded in SG&A Expenses on the Consolidated Statements of Operations. REQUIRED a. b. Prepare journal entries to record the following for 2018: i. Depreciation expense ii. Capital expenditures iii. Disposal of property, plant, and equipment iv. Impairments and write-downs (Assume that impairments and write-downs reduce the property and equipment account, rather than increasing accumulated depreciation.) Estimate the amount of property and equipment that was acquired, if any, through non-cash transactions.