Target Income Taxes And Pension Case Study

Running head: Target Inc – Income Taxes and Pension 1

Target Inc – Income Taxes and Pension 4

Income Taxes and Pension

Target Inc

Jackson Biegler

Southern New Hampshire University

Income Taxes

A. The income statement and balance sheets for Target will show a positive benefit respectively if Congress has successfully voted to eliminate taxes at the corporate level. Not only would the income statement show savings for income tax expense, but it would also increase the corresponding net income for Target. Additionally, there would be an increase in earning per share. On the other hand, the balance sheet would also show the benefits of not having a tax at the corporate level as well, as there would be no balance for income tax liability which would correlate with a retained earning increase. Furthermore, a retained earning increase helps the stockholders equity section of the balance sheet. Also, Target would have additional options on how to handle the extra money that is no longer being allocated to income taxes. For instance, they could increase employee morale with a slight pay increase or boost the long-term employee pensions for employees at the back end of their work life cycle or even invest in expansion for the company which would create more jobs in the

Target’s Pension plan is referred to as a defined benefit plan. This type of policy provides an already determined monthly retirement amount depending on the retiree 's specific age and service length. Additionally, for this kind of arrangement, each employee understands the agreement and its associated terms while Target agrees to invest in the fund to reach its obligation to its employees. The policy covers employees who are eligible and meet the requirement of age and length of service. The plans allocation of assets within the program work together to reduce the cost of funding the pension obligations (Target 2016 Annual Report). This suggests that the overall pension plan is