Note 2 - Land and Other Inventories

As of March 31, 2017 and December 31, 2016, land and other inventories consisted of the following (in thousands):


	March 31, 2017		December 31, 2016
Land held for future development	$	29,347	$	29,089
Land developed and in process of development		333,206		349,891
Homes completed or under construction		236,616		205,428
Total	$	599,169	$	584,408

We capitalize interest to inventories during the period of development in accordance with ASC 835, Interest (“ASC 835”). Homebuilding interest capitalized to cost of inventory is included in cost of sales as related units or lots are closed. To the extent our homebuilding debt exceeds our qualified assets, as defined in ASC 835, we expense a portion of interest incurred. Qualified homebuilding assets consist of land, lots and homes that are under development or construction, excluding finished unsold homes or finished models.

The following table represents interest incurred, interest capitalized, and interest expense for the three months ended March 31, 2017 and 2016 (in thousands):


	Three Months Ended
	March 31,
	2017		2016
Interest incurred	$	6,205	$	6,853
Interest capitalized		(5,368)		(5,581)
Interest expense	$	837	$	1,272