Target Corporation prepares its financial statements according to U.S. GAAP. Target's financial statements and disclosure notes for the year ended January 30, 2016, are available in Connect. This material is also available under the Investor Relations link at the company's website (www.target.com).
Required:
In its Analysis of "Financial Condition: New Accounting Pronouncements," Target's financial statements for the year ended January 30, 2016, the company indicates that:
In February 2016, the FASB issued ASU No. 2016-02, Leases, to require organizations that lease assets to recognize the rights and obligations created by those leases on the balance sheet. The new standard is effective in 2019, with early adoption permitted. We are currently evaluating the effect the new standard will have on our financial statements.
Refer to Note 22: Leases. When Target applies the new standard, what will be the primary effect on its financial statements? Explain.