Note 2

Inventories

New home inventory is carried at the lower of cost or market value. The cost of finished home inventories determined on the specific identification method is removed from inventories and recorded as a component of cost of sales at the time revenue is recognized. In addition, an allocation of depreciation and amortization is included in cost of goods sold. Under the specific identification method, if finished home inventory can be sold for a profit there is no basis to write down the inventory below the lower of cost or market value.

Pre-owned inventory is valued at the lower of the Company’s cost to acquire the inventory plus refurbishment costs incurred to date to bring the inventory to a more saleable state, or market value.

Other inventory costs are determined on a first-in, first-out basis.

Inventories were as follows:


	February 1, 2014			November 2, 2013
	February 1, 2014			November 2, 2013

Raw materials	$	578,385		$	571,621
Work-in-process		95,935			108,641
Finished homes		4,821,745			4,344,117
Model home furniture and others		21,535			19,437

Inventories, net	$	5,517,600		$	5,043,816


Pre-owned homes	$	8,427,218		$	9,215,590
Inventory impairment reserve		(2,387,476	)		(2,711,595	)

		6,039,742			6,503,995
Less homes expected to sell in 12 months		(2,571,210	)		(2,187,598	)

Pre-owned homes, long-term	$	3,468,532		$	4,316,397