read the following attached document and answer the following 3 question

(1) Managers are bound by GAAP and securities regulations to inform the investing public about an adverse event affecting the company. In this case, how did Target's managers communicate the adverse news and provide the relevant information about the data breach to customers and shareholders through their 10-K filed on March 14, 2014?

(2) Read the description of the data breach in their MD&A section carefully. What potential future costs related to the data breach did Target face?

(3) Discuss and explain how Target followed GAAP to identify, treat, and report loss contingencies pertaining to this data breach in their 10-K filed on March 14, 2014.

For Data Breach-related exposures, we are unable to reasonably estimate a range of probable loss in excess of the recorded payment card network contingent losses. We believe that losses from the payment card networks in excess of the amounts recorded in fiscal 2013 are reasonably possible, and that these losses could be material to our results of operations in future periods, but we are unable to estimate a range of such reasonably possible losses. We are also unable to estimate a range of reasonably possible losses arising from Data Breach-related litigation and governmental investigations. Finally, in the footnotes to the financial statements, Thrasher found the following: Insurance coverage To limit our exposure to Data Breach losses, we maintain $100 million of network-security insurance coverage, above a $10 million deductible. This coverage and certain other insurance coverage may reduce our exposure. We will pursue recoveries to the maximum extent available under the policies. As of February 1, 2014, we have recorded a $44 million receivable for costs we believe are reimbursable and probable of recovery under our insurance coverage, which partially offsets the $61 million of expense relating to the Data Breach. After examining the 10-K, Thrasher was unsure how important the data breach was to Target. On one hand, Target seemed to have thoroughly explained the breach and possible consequences. On the other, it seemed as if very little was known at the time. He wondered how material the breach was given that Target's net income was nearly $2 billion in 2013, it had $44.5 billion in assets, and it generated $6.5 billion in operating cash flows. Further, he also noticed that Target issued non-GAAP financial measures, which removed the effect of the data breach (see page 25 of the 10-K). its name several times as it merged with other retailers, and took the name Target Corporation in 2000. As of 2014, Target operated nearly 2,000 retail stores in every state in the United States (except Vermont) and Canada. It was the second-largest discount retailer in the United States, employing 366,000 full-time, part-time, and seasonal employees, and it was listed on the S&P 100. Dayton's philosophy of stewardship and giving pervaded the corporate culture; as of 2017, Target ranked number 44 among Forbes's list of most-admired companies. It ranked first in its industry for social responsibility, and its community giving was widely recognized. A recent report from the Chronicle of Philanthropy indicated that Target had donated over $215 million in cash and products, or 4.4% of its pretax profits in 2015, to causes dedicated to children and youths, education, health, and hunger.? Target Corporation 2013 Financial Results On March 14, 2014, Target issued its 2014 annual report. Thrasher could not help but notice the prominence Target gave to the data breach. Discussions of its effects began on page 2 and were repeated throughout the 10-K. Just out of curiosity, he searched the report for "data breach and found 70 hits! The management discussion and analysis (MD&A) included nearly two full pages about the breach, but the breach was also discussed in the description of the business, risk factors, and several other places in the annual report. Additionally, Thrasher found another disclosure later in the MD&A that described Target's accounting for legal and other contingencies as follows: Legal and other contingencies: We are exposed to other claims and litigation arising in the ordinary course of business and use various methods to resolve these matters in a manner that we believe serves the best interest of our shareholders and other constituents. When a loss is probable, we record an accrual based on the reasonably estimable loss or range of loss. When no point of loss is more likely than another, we record the lowest amount in the estimated range of loss and disclose the estimated range. We do not record liabilities for reasonably possible loss contingencies, but do disclose a range of reasonably possible losses if they are material and we are able to estimate such a range. If we cannot provide a range of reasonably possible losses, we explain the factors that prevent us from determining such a range. Historically, adjustments to our estimates have not been material. We believe the accruals recorded in our consolidated financial statements properly reflect loss exposures that are both probable and reasonably estimable. With the exception of Data Breach-related loss exposures, we do not believe any of the currently identified claims or litigation will materially affect our results of operations, cash flows or financial condition. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, it may cause a material adverse impact on the results of operations, cash flows or financial condition for the period in which the ruling occurs, or future periods. Page 4 UV7357 Exhibit 1 Target Data Breach: Accounting for contingent Liabilities Target Corporation Share Price 80 75 70 Share Price o non wan Lewat 55 50 01/02/2013 02/15/2013 08/14/2013 09/27/2013 11/11/2013 02/11/2014 03/27/2014 05/12/2014 08/08/2014 11/05/2014 12/19/2014 12/26/2013 06/25/2014 09/23/2014 Date 04/03/2013 05/16/2013 07/01/2013 Source: Created by author