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Note 12 - Reduction of Inventory to Fair Value | 12 Months Ended
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Oct. 31, 2023
Notes to Financial Statements |
Inventory Impairments and Land Option Cost Write-offs [Text Block] | 12. Reduction of Inventory to Fair Value We had 380 communities under development and held for future development or sale at October 31, 2023 and 374 communities under development and held for future development or sale at both October 31, 2022 and 2021, which we evaluated for impairment indicators (i.e., those with a projected operating loss). We performed an undiscounted future cash flow analysis for one community during the year ended October 31, 2023, which we had recorded an impairment for in the prior year. As a result of such analysis, we did not identify any additional impairment for the community. During the year ended October 31, 2022, one community, with a carrying value of $10.6 million, had an impairment indicator. The impairment analysis on the community included increased land development costs from previous projections, along with a downturn in the local market, resulting in an impairment of $8.4 million. During the year ended October 31, 2021, we performed undiscounted future cash flow analyses for three communities with an aggregate carrying value of $11.5 million. Based on the results of our undiscounted future cash flow analyses, we performed discounted cash flow analyses on all three communities, resulting in impairments of $2.0 million. Our aggregate impairment charges are included within "Inventory impairments and land option write-offs" in the Consolidated Statement of Operations and deducted from inventory. The following table represents impairments by segment for fiscal 2022 and 2021:
(Dollars in millions) |  | Year Ended October 31, 2022 |
|  |  |  |  |  | Dollar |  |  | Pre- |
|  | Number of |  |  | Amount of |  |  | Impairment |
|  | Communities |  |  | Impairment |  |  | Value (1) |
Northeast |  |  | - |  |  | $ | - |  |  | $ | - |
Southeast |  |  | - |  |  |  | - |  |  |  | - |
West |  |  | 1 |  |  |  | 8.4 |  |  |  | 10.6 |
Total |  |  | 1 |  |  | $ | 8.4 |  |  | $ | 10.6 |
(Dollars in millions) |  | Year Ended October 31, 2021 |
|  |  |  |  |  | Dollar |  |  | Pre- |
|  | Number of |  |  | Amount of |  |  | Impairment |
|  | Communities |  |  | Impairment |  |  | Value (1) |
Northeast |  |  | - |  |  | $ | - |  |  | $ | - |
Southeast |  |  | 2 |  |  |  | 1.2 |  |  |  | 9.2 |
West |  |  | 1 |  |  |  | 0.8 |  |  |  | 2.3 |
Total |  |  | 3 |  |  | $ | 2.0 |  |  | $ | 11.5 |
(1) | Represents carrying value, net of prior period impairments, if any, at the time of recording the applicable period’s impairments.
Write-offs of options, engineering and capitalized interest costs are also recorded in "Inventory impairments and land option write-offs" when we redesign communities, abandon certain engineering costs or do not exercise options in various locations because the pro forma profitability is not projected to produce adequate returns on investment commensurate with the risk. The total aggregate write-offs related to these items were $1.5 million, $5.7 million and $1.6 million for the years ended October 31, 2023, 2022 and 2021, respectively. Occasionally, these write-offs are offset by recovered deposits, sometimes through legal action, which had been written off in a prior period as walk-away costs. Historically, these recoveries have not been significant in comparison to the total costs written off. The following table represents write-offs of such costs by segment for fiscal 2023, 2022 and 2021:
|  | Year Ended October 31, |
(In millions) |  | 2023 |  |  | 2022 |  |  | 2021 |
Northeast |  | $ | 0.5 |  |  | $ | 0.4 |  |  | $ | 0.3 |
Southeast |  |  | 0.5 |  |  |  | 0.9 |  |  |  | 0.2 |
West |  |  | 0.5 |  |  |  | 4.4 |  |  |  | 1.1 |
Total |  | $ | 1.5 |  |  | $ | 5.7 |  |  | $ | 1.6 |

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