Company: LEN
Filing Date: 2025-01-23
Form Type: 10-K
Source: 0001628280-25-002404
Chunk: 18

Company: LENNAR CORP /NEW/
Filing Date: 2025-01-23
Form: 10-K
Item: Item 8
Chunk 18
---
 inventory, as well as inventory not currently impaired but for which indicators of impairment may arise if market deterioration occurs, and certain other assets that could result in further valuation adjustments and/or additional write-offs of option deposits and pre-acquisition costs due to abandonment of those options contracts.The Company's valuation adjustments for finished homes and construction in progress were included in Homebuilding costs and expenses in the Company's consolidated statements of operations and comprehensive income (loss) for the years ended November 30, 2024 and 2023. The table below summarizes communities reviewed for indicators of impairment and communities with valuation adjustments recorded: At November 30,Communities with valuation adjustments for the years ended November 30,# of communities with potential indicators of impairment# of communitiesFair Value(in thousands)Valuation Adjustments(in thousands)2024336$40,465$18,5992023251895,73137,500The table below summarizes the most significant unobservable inputs used in the Company's discounted cash flow model to determine the fair value of its communities for which the Company recorded valuation adjustments:Years Ended November 30,20242023Unobservable inputsRangeRangeAverage selling price (1)$178,000—$702,000 $179,000 —$850,000 Absorption rate per quarter (homes)6—153—26Discount rate20%20%(1)Represents the projected average selling price on future deliveries for communities in which the Company recorded valuation adjustments during the years ended November 30, 2024 and 2023.In the course of executing on the Company’s land light strategy, the Company may sell land to third parties (including land banks) and unconsolidated entities while maintaining an option to repurchase the land in the future. Although, such transactions include cash consideration from the buyer and the transfer of title from the Company to the buyer, such transactions do not meet the criteria for revenue recognition under GAAP due to the Company’s option to repurchase the land from the buyer in the future. As such, land related to such transactions remains on the Company’s accompanying consolidated balance sheet and is reclassified from land and land under development to consolidated inventory not owned. The liabilities related to consolidated inventory not owned primarily represent the difference between the option exercise prices for the optioned land and the Company’s cash deposits. During the year ended November 30, 2024, consolidated inventory not owned increased by $1.1 billion with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying consolidated balance sheet as