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). Target leases most of its facilities.

Required:

1. Refer to disclosure note 22 following Target's financial statements. What is the amount reported for "capital" leases (shown as the present value of minimum lease payments)? What is the total of those lease payments? What accounts for the difference between the two amounts?

2. What is the total of the operating lease payments? New lease accounting guidance (discussed in Chapter 15) will require companies to report operating leases at present value as well as capital leases (now called finance leases). If Target had used the new lease accounting guidance in its 2016 financial statements, what would be the amount reported for operating leases? Hint: Assume the payments "after 2020" are to be paid evenly over a 16 years period and all payments are at the end of years indicated. Target indicates elsewhere in its financial statements that 6% is an appropriate discount rate for its leases.