Target 2011 Annual Report Download - page 66

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flows from the assets in the Trust are sufficient. Future principal payments will be made from the third party’s pro
rata share of cash flows from the Trust assets.
January 28, 2012 January 29, 2011
Securitized Borrowings
(millions) Debt Balance Collateral Debt Balance Collateral
2008 Series (a) $— $— $2,954 $3,061
2006/2007 Series 1,000 1,266 1,000 1,266
Total $1,000 $1,266 $3,954 $4,327
(a) The debt balance for the 2008 Series is net of a 7% discount from JPMC. The unamortized portion of this discount was $107 million as of
January 29, 2011.
11. Inventory
Substantially all inventory and the related cost of sales are accounted for under the retail inventory accounting
method (RIM) using the last-in, first-out (LIFO) method. Inventory is stated at the lower of LIFO cost or market. Cost
includes purchase price as reduced by vendor income. Inventory is also reduced for estimated losses related to
shrink and markdowns. The LIFO provision is calculated based on inventory levels, markup rates and internally
measured retail price indices.
Under RIM, inventory cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to
the retail value inventory. RIM is an averaging method that has been widely used in the retail industry due to its
practicality. The use of RIM will result in inventory being valued at the lower of cost or market because permanent
markdowns are currently taken as a reduction of the retail value of inventory.
We routinely enter into arrangements with vendors whereby we do not purchase or pay for merchandise until
the merchandise is ultimately sold to a guest. Activity under this program is included in sales and cost of sales in the
Consolidated Statements of Operations, but the merchandise received under the program is not included in
inventory in our Consolidated Statements of Financial Position because of the virtually simultaneous purchase and
sale of this inventory. Sales made under these arrangements totaled $1,630 million in 2011, $1,581 million in 2010
and $1,470 million in 2009.
12. Other Current Assets
Other Current Assets January 28, January 29,
(millions) 2012 2011
Vendor income receivable $ 589 $ 517
Other receivables (a) 411 405
Deferred taxes 275 379
Other 535 451
Total $1,810 $1,752
(a) Includes pharmacy receivables and income taxes receivable. We have not historically had significant write-offs for these receivables.
13. 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 2011, 2010
and 2009 was $2,107 million, $2,060 million and $1,999 million, respectively. For income tax purposes, accelerated
depreciation methods are generally used. Repair and maintenance costs are expensed as incurred and were
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