Company: MCFT
Filing Date: 2025-08-27
Form Type: 10-K
Source: 0000950170-25-111682
Chunk: 33

Company: MasterCraft Boat Holdings, Inc.
Filing Date: 2025-08-27
Form: 10-K
Item: Item 6
Chunk 33
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 claim data and projected future product warranty claims.•We evaluated the accuracy and completeness of the historical product warranty claims as an input to management’s accrued warranty liability calculation.•We evaluated management’s ability to accurately estimate the accrued warranty liability by comparing the accrued warranty liability in the prior year to the actual product warranty claims paid in the current year.•We evaluated the completeness of the accrued warranty liability through inquiries of operational and executive management regarding knowledge of known product warranty claims or product issues and evaluated whether they were appropriately considered in the determination of the accrued warranty liability.•We assessed management’s methodology and tested the valuation of the accrued warranty liability by developing an independent expectation for the accrual based on historical and current year warranty claims activity and any known trends in warranty claims or specific product issues, and compared our expectation to the amount recorded by management.Other Intangible Assets — Crest Impairment Evaluation — Refer to Notes 1 and 7 to the financial statementsCritical Audit Matter DescriptionThe Company has definite and indefinite-lived intangible assets associated with the Crest dealer network and trade name, respectively. The Company reviews definite lived intangible assets that are held and used for impairment whenever events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable. Additionally, the Company tests its indefinite-lived intangible assets for impairment annually as of June 30, or between annual test dates if an event occurs or circumstances change that would indicate that the carrying amount may be impaired.During the fiscal 2025 fourth quarter, there was an indication that the Crest definite and indefinite-lived intangible assets were either not recoverable or may be impaired. As a result, an interim impairment test was performed by the Company. In performing the impairment test of the Crest dealer network intangible asset, the Company utilized an income approach through the application of the multi-period excess earnings approach. In performing its test for impairment of the Crest trade name intangible asset, the Company applied a relief-from-royalty approach, a variation of the income approach, to estimate fair value. In applying the valuation approaches, management is required to make certain assumptions, including revenue growth and expense forecasts, as well as the selection of an appropriate royalty rate, dealer attrition rate, and discount rate.We identified the impairment evaluation for the Crest definite and indefinite-lived intangible assets as a critical audit matter due to the judgments required by management in estimating revenue growth and expense forecasts, the selection of an appropriate discount rate, and the determination of dealer attrition and royalty rates. Further, auditing the impairment evaluation required auditor judgment and significant effort