Company: SDHC
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0001982518-25-000064
Chunk: 78

Company: Smith Douglas Homes Corp.
Filing Date: 2025-08-06
Form: 10-Q
Item: Part I, Item 8
Chunk 78
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 based on the portion of the LLC Interests owned by such unit holders. As of June 30, 2025 and December 31, 2024, the non-controlling interests were 82.5% and 82.7%, respectively.Use of estimates in the preparation of unaudited condensed consolidated financial statementsThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.Real estate inventoryReal estate inventory consists primarily of the capitalized costs of finished homes, homes under construction, and residential lots. The Company includes the costs of lot acquisitions, development, direct home construction, capitalized interest, closing costs and direct and certain indirect overhead costs incurred during home construction in real estate inventory.Real estate inventory is stated at cost unless a community is determined to be impaired, at which point the inventory is written down to fair value as required by ASC Topic 360-10, Property, Plant, and Equipment. The Company reviews its real estate inventory for indicators of potential impairment on a quarterly basis at the community level considering market and economic conditions, current sales absorption rates and recent profitability of new home sales. When an indicator of 

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impairment is identified, the Company prepares and analyzes cash flows at the community level on an undiscounted basis. If the undiscounted cash flows are less than the community's carrying value, the Company generally estimates the fair value using the estimated future discounted cash flows of the respective community. A community with a fair value less than its carrying value is written down to such fair value and resulting losses are reported within cost of home closings in the accompanying consolidated statements of income. During the six months ended June 30, 2025, the Company recognized an inventory impairment charge of $0.6 million in the Central reporting segment, which is included within cost of home closings in the accompanying unaudited condensed consolidated statements of income. No impairment charges were recognized during the six months ended June 30, 2024.Revenue recognitionThe Company recognizes revenue when a home closes with a homebuyer, which is the time at which title and possession of the property are transferred to that homebuyer and all cash consideration due from the homebuyer is received. The Company’s performance obligation, to deliver the home, is generally satisfied in less than one year from the original contract date.When the Company executes sales contracts with its homebuyers, or when it requires advance payment