Target Corporation is amongst the leading retailers in the United States. The corporation is also ranked amongst the fastest growing because of its consolidation scheme with 1,556 stores spread across 47 states in the US. The income statements of Target Corporation present the organization’s financial results of its business activities. The income statements of Target Corporation communicate the amount of revenues that the organization generated within a specific period and the costs that the organization incurred in generating its revenues. As per the 2018 annual report of Target Corporation, the consolidated financial statements of the organization included Target Corporation balances on its subsidiaries from the transactions and balances. Target Corporation owns all the material subsidiaries thus the variable interests’ entities of the organization are included in the corporation’s consolidated financial statements. Target Corporation financial statements includes the variable interest entities which currently have emerged as the new business structures that provide Target Corporation an effective control of its stores either through acquisition, mergers or as joint ventures.
From Target Corporationsubsidiaries as at 2018financial year, the organization directly owns the stock in all the entities. Thus, it holds control of the subsidiaries through direct and indirect ownership since it combines stocks of many entities within its business operations. Thus it controls all the interest in the other entities ( El Din, 2018) . This organization of the corporate structure helps to group the entities along their product lines. Target Corporation has direct control and the proximity of all the subsidiaries to have a clear line of communication and assuming of responsibility.
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Target Corporation includes all the mother company’s balances and those from the subsidiaries in its annual financial statements. The financial statements from all the entities are consolidated into a single statement. There are some subsidiaries that Target Corporation does not fully have control over; thus, the subsidiaries make their financial statements separately. Target Corporation recognizes the equity income that accrues from the subsidiaries. They consolidate the equities before computation of the overall income. The rollup starts from the lower subsidiaries to significant subsidiaries to Target Corporation. With this structure, Target Corporation can quickly get the right values of the accrual-based net income ( Young, Cohen & Bens, 2018) . In the calculation of the consolidated net income, Target Corporation always adjusts its reported earnings to gain an excess fair value in the amortization of all Target Corporation's subsidiaries.
Target Corporation is a responsible corporation in its tax obligations. The corporation and all its subsidiaries always file a consolidated income tax returns. Target Corporation’s consolidated financial statements encompass all the balances from the corporation and those recorded from the subsidiaries. The corporation owns almost eighty percent of the organization’s voting stock. Target Corporation files consolidated tax returns not because it is a requirement of the law, but the filing of the returns is associated with benefits. Some of the benefits include: the corporation will not be taxed off the intra-entity profits. Similarly, intra-entity losses of the organization are not deducted until when they are realized. If one subsidiary realizes that operating loses profits from another entity will be used to offset the losses. This also implies of the capital losses where capital gains from an entity automatically offset the losses from another entity ( Johnson, 2019) . The organization reduces on the assess related hindrances; for instance, buying of shares can be easily executed without the need for ascending to capital pickup and liquidation of the organization’s profits ( Johnson, 2019) . There is no need for a formal rollover in moving resources and profits of the subsidiaries. The organization also enjoys reduced solitary wages on bookkeeping.
References
Demers, E. A., & Yemen, G. (2015). Introduction to Consolidation Accounting: Google's Acquisition of Waze.
Johnson, S. (2019). Analysis of Financial Accounting Theory and Methodologies (Doctoral dissertation, The University of Mississippi).
Young, S. D., Cohen, J., & Bens, D. A. (2018). Corporate financial reporting and analysis: a global perspective . Wiley.
