- 34 - TARGET'S SHRINKAGE METHOD Target Book Taxable Sales- Shrinkage Minus Difference as Year Target Allocated Sales-Allocated Percent of Ending Book Taxable Year Taxable Year Sales-Allocated In Shrinkage Shrinkage Shrinkage Shrinkage 1983 $54,175,800 $48,257,951 $5,917,849 12.26% 1984 63,773,400 63,217,484 555,916 0.88% 1985 66,205,504 73,483,645 -7,278,141 -9.90% 1986 82,227,200 81,441,206 785,994 0.97% 1983- 266,381,904 266,400,286 -18,382 -0.01% 1986 RESPONDENT'S METHOD - TARGET DIVISION Verified Taxable Loss Sales- Loss Minus Difference as Year Verified by Allocated Sales-Allocated Percent of Ending Physical Taxable Year Taxable Year Sales-Allocated In Inventory Shrinkage Shrinkage Shrinkage 1983 $41,733,212 $48,257,951 -$6,524,739 -13.52% 1984 51,323,565 63,217,484 -11,893,929 -18.81% 1985 65,194,206 73,483,645 -8,289,439 -11.28% 1986 80,248,800 81,441,206 -1,192,406 -1.46% 1983- 238,499,783 266,400,286 -27,630,152 -10.37% 1986 Dr. Seago determined that Target's estimates of taxable year shrinkage produced, in the aggregate, a net underestimate in the amount of $18,382 for the taxable years ending in 1983 through 1986 when compared to sales-allocated taxable year shrinkage. He also determined that the maximum error under Target's shrinkage method was 12.26 percent of sales-allocated taxable year shrinkage. From that analysis, Dr. Seago concludes that the Divisions' shrinkage methods produced “a reasonably accurate measure of the loss” occasioned by shrinkage factors. Dr. Seago notes that, in contrast, respondent's method yields a cumulative overstatement of income in the amount of $27,630,152. Dr. SeagoPage: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 Next
Last modified: May 25, 2011