Company: MCFT
Filing Date: 2025-08-27
Form Type: 10-K
Source: 0000950170-25-111682
Chunk: 32

Company: MasterCraft Boat Holdings, Inc.
Filing Date: 2025-08-27
Form: 10-K
Item: Item 6
Chunk 32
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 Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.Critical Audit MattersThe critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.Product Warranties — Refer to Notes 1 and 8 to the financial statementsCritical Audit Matter DescriptionThe Company offers warranties on the sale of certain of its products from the date of retail sale. Estimated costs that may be incurred under these warranties are accrued at the time the product revenue is recognized. These estimated costs are based upon the number of units sold, historical and anticipated rates of warranty claims, and the cost per claim. The Company periodically assesses the adequacy of the recorded warranty liabilities and adjusts the amounts as actual claims are determined or as changes in the obligations become reasonably estimable.We identified the accrued warranty liability related to the MasterCraft and Pontoon segments as a critical audit matter because of the significant judgments made by management to estimate the anticipated rates of warranty claims and cost per claim related to product warranties. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s estimates of the rates and costs of future warranty claims.How the Critical Audit Matter Was Addressed in the AuditOur audit procedures related to the accrued warranty liability for the MasterCraft and Pontoon segments included the following, among others:

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•We tested the design and operating effectiveness of controls over management’s estimation of the accrued warranty liability, including those over historical product warranty