Target Corporation provides the following footnote relating to its retirement plans in its 2017 10-K report: Defined Contribution Plans Team members who meet eligibility requirements can participate in a defined contribution 401(k) plan by investing up to 80 percent of their eligible earnings. as limited by statute or regulation. We match 100 percent of each team member's contribution up to 5 percent of eligible earnings.

Company match contributions are made to funds designated by the participant, none of which are based on Target common stock. Benefits expense related to these matching contributions was $219 million,$197 million, and $224 million in 2017, 2016, and 2015, respectively.

a. Does Target have a defined contribution or defined benefit pension plan? Explain.

Core Co. leased a piece of manufacturing equipment from E-So Co. with the following terms:

Annual lease payment - $1,100,000 Term of lease - 5 years Interest rate - 4.0% The lease commences on January 1, 2020. Payments are made on December 31 of each year in the lease term.

b. Prepare a lease liability amortization schedule and right-of-use asset amortization schedule for the lessee.

Core Co. leased a piece of manufacturing equipment from E-So Co. with the following terms:

Annual lease payment - $1,100,000 Term of lease - 5 years Interest rate - 4.0% The lease commences on January 1, 2020. Payments are made on December 31 of each year in the lease term.

a. Compute the value of the right-of-use asset and the lease liability on the date the lease commences.

Fisk. Inc., purchased $600.000 of construction equipment on January I, 2019. The equipment is being depreciated on a straight-line basis over six years with no expected salvage value. MACRS depreciation is being used on the firm's tax returns. On December 31. 2021, the equipment's book value is$300,000 and its tax basis is $173,000 (this is Fisk's only temporary difference). Over the next three years. straight-line depreciation will exceed MACRS depreciation by$31,000 in 2022, $31,000 in 2023, and$65,000 in 2024. Assume that the income tax rate in effect for all years is 25%.

d. Where should the deferred tax liability accounts be classified in Fisk's balance sheets?

Fisk. Inc., purchased $600.000 of construction equipment on January I, 2019. The equipment is being depreciated on a straight-line basis over six years with no expected salvage value. MACRS depreciation is being used on the firm's tax returns. On December 31. 2021, the equipment's book value is$300,000 and its tax basis is $173,000 (this is Fisk's only temporary difference). Over the next three years. straight-line depreciation will exceed MACRS depreciation by$31,000 in 2022, $31,000 in 2023, and$65,000 in 2024. Assume that the income tax rate in effect for all years is 25%.

c. What amount of deferred tax liability should appear in Fisk's December 31, 2023, balance sheet?

Fisk. Inc., purchased $600.000 of construction equipment on January I, 2019. The equipment is being depreciated on a straight-line basis over six years with no expected salvage value. MACRS depreciation is being used on the firm's tax returns. On December 31. 2021, the equipment's book value is$300,000 and its tax basis is $173,000 (this is Fisk's only temporary difference). Over the next three years. straight-line depreciation will exceed MACRS depreciation by$31,000 in 2022, $31,000 in 2023, and$65,000 in 2024. Assume that the income tax rate in effect for all years is 25%.

b. What amount of deferred tax liability should appear in Fisk's December 31, 2022, balance sheet?

Fisk. Inc., purchased $600.000 of construction equipment on January I, 2019. The equipment is being depreciated on a straight-line basis over six years with no expected salvage value. MACRS depreciation is being used on the firm's tax returns. On December 31. 2021, the equipment's book value is$300,000 and its tax basis is $173,000 (this is Fisk's only temporary difference). Over the next three years. straight-line depreciation will exceed MACRS depreciation by$31,000 in 2022, $31,000 in 2023, and$65,000 in 2024. Assume that the income tax rate in effect for all years is 25%.

a. What amount of deferred tax liability should appear in Fisk's December 31, 2021, balance sheet?

Nike, Inc., reports the following information relating to its manufacturing activities in the footnotes to its 2018 10-K report:

We are supplied by 124 footwear factories located in 13 countries. The largest single footwear factory accounted for approximately 9% of total fiscal 2018 NIKE Brand footwear production. Virtually all of our footwear is manufactured outside of the United States by independent contract manufacturers which often operate multiple factories. For fiscal 2018, contract factories in Vietnam, China and Indonesia manufactured approximately 47%, 26% and 21% of total NIKE Brand footwear, respectively. We also have manufacturing agreements with independent contract manufacturers in Argentina, India, Brazil, Mexico and Italy to manufacture footwear for sale primarily within those countries. For fiscal 2018, five footwear contract manufacturers each accounted for greater than 10% of footwear production and in the aggregate accounted for approximately 69% of NIKE Brand footwear production.

Nike executes purchase contracts with its contract manufacturers to purchase their output. How are executory contracts reported under GAAP? Does your answer suggest a possible motivation for the use of contract manufacturing?

Nike, Inc., reports the following information relating to its manufacturing activities in the footnotes to its 2018 10-K report:

We are supplied by 124 footwear factories located in 13 countries. The largest single footwear factory accounted for approximately 9% of total fiscal 2018 NIKE Brand footwear production. Virtually all of our footwear is manufactured outside of the United States by independent contract manufacturers which often operate multiple factories. For fiscal 2018, contract factories in Vietnam, China and Indonesia manufactured approximately 47%, 26% and 21% of total NIKE Brand footwear, respectively. We also have manufacturing agreements with independent contract manufacturers in Argentina, India, Brazil, Mexico and Italy to manufacture footwear for sale primarily within those countries. For fiscal 2018, five footwear contract manufacturers each accounted for greater than 10% of footwear production and in the aggregate accounted for approximately 69% of NIKE Brand footwear production.

What effect does the use of contract rmmufacturers haw on Nike's balance sheet?

Abercrombie & Fitch Co. discloses the following footnote relating to its retirement plans in its 2017 10-K report:

16. SAVINGS AND RETIREMENT PLANS: The Company maintains the Abercrombie & Fitch Co. Savings & Retirement Plan, a qualified plan. All U.S. associates are eligible to participate in this plan if they are at least 21 years of age. In addition, the Company maintains the Abercrombie & Fitch Co. Nonqualified Savings and Supplemental Retirement, composed of two sub-plans (Plan I and Plan II). Plan I contains contributions made through December 31, 2004, while Plan II contains contributions made on and after January 1, 2005. Participation in these plans is based on service and compensation. The Company's contributions to these plans are based on a percentage of associates' eligible annual compensation. The cost of the Company's contributions to these plans was $14.4 million,$11.1 million and $15.4 million for Fiscal 2017, Fiscal 2016 and Fiscal 2015, respectively.

c. How is Abercrombie's obligation to its retirement plan reported on its balance sheet?

Abercrombie & Fitch Co. discloses the following footnote relating to its retirement plans in its 2017 10-K report:

16. SAVINGS AND RETIREMENT PLANS: The Company maintains the Abercrombie & Fitch Co. Savings & Retirement Plan, a qualified plan. All U.S. associates are eligible to participate in this plan if they are at least 21 years of age. In addition, the Company maintains the Abercrombie & Fitch Co. Nonqualified Savings and Supplemental Retirement, composed of two sub-plans (Plan I and Plan II). Plan I contains contributions made through December 31, 2004, while Plan II contains contributions made on and after January 1, 2005. Participation in these plans is based on service and compensation. The Company's contributions to these plans are based on a percentage of associates' eligible annual compensation. The cost of the Company's contributions to these plans was $14.4 million,$11.1 million and $15.4 million for Fiscal 2017, Fiscal 2016 and Fiscal 2015, respectively.

b. How does Abercrombie account for its contributions to its retirement plan?

Abercrombie & Fitch Co. discloses the following footnote relating to its retirement plans in its 2017 10-K report:

16. SAVINGS AND RETIREMENT PLANS: The Company maintains the Abercrombie & Fitch Co. Savings & Retirement Plan, a qualified plan. All U.S. associates are eligible to participate in this plan if they are at least 21 years of age. In addition, the Company maintains the Abercrombie & Fitch Co. Nonqualified Savings and Supplemental Retirement, composed of two sub-plans (Plan I and Plan II). Plan I contains contributions made through December 31, 2004, while Plan II contains contributions made on and after January 1, 2005. Participation in these plans is based on service and compensation. The Company's contributions to these plans are based on a percentage of associates' eligible annual compensation. The cost of the Company's contributions to these plans was $14.4 million,$11.1 million and $15.4 million for Fiscal 2017, Fiscal 2016 and Fiscal 2015, respectively.

a. Does Abercrombie have a defined contribution or defined benefit pension plan? Explain.

YUM! Brands, Inc., discloses the following pension footnote in its 10-K report: Pension

Explain use of the word expected as it relates to results of pension plan investments.

YUM! Brands, Inc., discloses the following pension footnote in its 10-K report: Pension

What effect does its "expected return on plan assets" have on its reported pension expense? Explain.