Target Corporation operates in a single business segment that is designed to enable guests to purchase products seamlessly in stores, online or through mobile devices. Most of its operations are in the United States.
Walmart is engaged in the operation of retail, wholesale, and other units located throughout the United States, Africa, Argentina, Brazil, Canada, Central America, Chile, China, India, Japan, Mexico, and the United Kingdom. The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International, and Sam's Club. Information taken from both firms' fiscal 2014 annual reports to shareholders follows. The fiscal 2014 years end in January 2015.
Target Corporation
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. . . . For income tax purposes, accelerated depreciation methods are generally used. Repair and maintenance costs are expensed as incurred. Facility preopening costs, including supplies and payroll, are expensed as incurred. Estimated useful lives by major asset category are as follows:
Asset ____________________________________Life (in Years)
Buildings and improvements......................................8-39
Fixtures and equipment............................................2-15
Computer hardware and software.................................2-7
Selected Income Statement Information

Wal-Mart Stores, Inc.
Property and Equipment

Estimated useful lives for financial statement purposes are as follows
Asset_______________________________ Life (in Years)
Buildings and improvements...............................3-40
Fixtures and equipment.....................................2-30
Transportation equipment...................................3-15
Selected Income Statement Information

Required:
Assume a 35% tax rate.
1. Estimate the average useful life of each firm's long-lived assets as of January 31, 2015.
2. Calculate a revised estimate of Walmart's depreciation expense for the year ended January 31, 2015 using the estimated average useful life of Target's assets. Use this amount to recalculate Walmart's income before taxes and income from continuing operations for the year ended January 31, 2015.
3. Calculate a revised estimate of Target's depreciation expense for the year ended January 31, 015 using the estimated average useful life of Walmart's assets. Use this amount to recalculate Target's earnings before income taxes and net earnings from continuing operations for the year ended January 31, 2015.
4. Why might a financial analyst want to make adjustments in requirements 2 and 3?
5. What factors will affect the reliability and accuracy of the adjustments performed in requirements 2 and 3?

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January 31 February 1, $ in milions) 2015 2014 Land Buildings and improvements Fixtures and equipment Computer hardware and software Construction in progress Accumulated depreciation Property and equipment-net 6,127 26,614 5,346 2,553 6,143 25,984 5,199 2,395 424 757 (15,106) (14,066) Years Ended January 31 February 1 $ in millions) Depreciation and amortization Earnings before income taxes Net earnings from continuing operations 2015 2014 $2,129 3,653 2,449 $1,996 4,121 2,214 January 31, 2015 January 31, 2014 ($ in millions) Buildings and improvements Fixtures and equipment Transportation equipment Property under capital lease Property and equipment S 26,261 97,496 45,044 2,807 5.787 177,395 (63,115) $114,280 S 26,184 95.488 42,971 2,785 5,661 173,089 (57.725) Accumulated depreciation Property and equipment, net $115,364 Years Ended January 31, 2015 January 31, 2015 ($ in millions) Depreciation and amortization Income from continuing operations S 8,800 24,656 $ 9,100 24,799 before income taxes Income from continuing operations 16,814 16,551