Company: LEN
Filing Date: 2025-01-23
Form Type: 10-K
Source: 0001628280-25-002404
Chunk: 3

Company: LENNAR CORP /NEW/
Filing Date: 2025-01-23
Form: 10-K
Item: Item 8
Chunk 3
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 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 Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was 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 matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Lennar Homebuilding and Lennar Multifamily Investments in Unconsolidated Entities - Consolidation of Variable Interest Entities - Refer to Note 1, Summary of Significant Accounting Policies (Variable Interest Entities), and Note 8, Variable Interest Entities, to the Consolidated financial statements

Critical Audit Matter Description

Generally Accepted Accounting Principles (“GAAP’’) requires the assessment of whether an entity is a Variable interest entity (“VIE”) and, if so, if the Company is the primary beneficiary at the inception of the entity or at a reconsideration event. Additionally, GAAP requires the consolidation of VIEs in which an enterprise has a controlling financial interest. A controlling financial interest will have both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Certain of the Company’s investments in unconsolidated entities within their Homebuilding and Multifamily segments need to be evaluated for consolidation, including determining whether the joint venture is a VIE, and if so, whether the Company is the primary beneficiary. This assessment is performed at the formation of the joint venture and upon the occurrence of reconsideration events. This determination requires significant judgment by management. 

We identified the consolidation and primary beneficiary assessment upon formation and the occurrence of reconsideration events of certain of the Company’s VIE’s as a critical audit matter given the significant judgment required by management. 

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This required a high degree