HOMEBUILDERS LENNAR CORPORATION AND SUBSIDIARIES*CONSOLIDATED STATEMENTS OF OPERATIONS Revenues: Lennar Homebuilding Lennar Financial services Rialto Investments Years Ended November 30, 2010, 2009 and 2008Total revenues Costs and expenses: Lennar Homebuilding (1)Lennar Financial services (2)Rialto Investments Corporate general and administrative Lennar Homebuilding equity in loss from Total costs and expenses unconsolidated entities (3)Lennar Homebuilding other income (expense), net (4)Other interest expense Gain on recapitalization of Lennar Homebuilding2010(Dollars in thousands, except per unconsolidated entity Rialto Investments equity in earnings from$2,705,639275,78692,5973,074,022unconsolidated entities2009Rialto Investments other income, net Earnings (loss) before income taxes Benefit (provision) for income taxes (5)Net earnings (loss) (including net earnings (loss)share amounts)2,834,285285,102—3,119,38720082,543,323244,50267,90493,9262,949,655attributable to noncontrolling 4,263,038312,379—4,575,4173,210,386249,1202,528117,5653,579,599(10,966)19,135(70,245)4,541,881343,369—129,7525,015,002(130,917)(98,425)(70,850)—15,36317,25194,72525,734(59,156)(172,387)(27,594)——(760,404)314,345—120,459133,097——(565,625)(547,557)(446,059)(1,113,182) “less: Net earnings (loss) attributable to noncontrolling interests (6)Net earnings (loss) attributable to Lennar Basic earnings (loss) per share Diluted earnings (loss) per share(1) Lennar Homebuilding costs and expenses include $51.3 million, $373.5 million and$340.5 million, respectively, of valuation adjustments and write-offs of option deposits and pre-acquisition costs for the years ended November 30, 2010, 2009 and 2008.(2) Lennar Financial Services costs and expenses for the year ended November 30, 2008CHAPTER 4 Income Statement 1892010(3) Lennar Homebuilding equity in loss from unconsolidated entities includes the Company’s share of valuation adjustments related to assets of unconsolidated entities in which the Company has investments of $10.5 million, $101.9 million and $32.2 million, respectively, for the years ended November 30, 2010, 2009 and2008.include a $27.2 million impairment of goodwill.(Dollars in thousands, except per2009$$$25,19895,2610.510.51share amounts)(4) Lennar Homebuilding other income (expense), net includes valuation adjustments to investments in Lennar Homebuilding unconsolidated entities of $1.7 million, $89.0million and $172.8 million, respectively, for the years ended November 30, 2010, 2009and 2008.(28,912)(417,147)(2.45)(2.45)2008(5) Benefit (provision) for income taxes for the year ended November 30, 2010primarily related to settlements with various taxing authorities. For the year ended November 30, 2009, benefit (provision) for income taxes includes a reversal of the Company’s deferred tax asset valuation allowance of $351.8 million. For the year ended November 30, 2008, benefit (provision) for income taxes includes a$730.8 million valuation allowance recorded against the Company’s deferred tax assets.(4,097)(1,109,085)(7.01)(7.01)(6) Net earnings (loss) attributable to noncontrolling interests for the year ended November 30, 2010 includes $33.2 million related to the FDIC’s interest in the portfolio of real estate loans that the Company acquired in partnership with theodicy. Net earnings (loss) attributable to noncontrolling interests for the year ended November 30, 2009 includes ($13.6) million recorded as a result of $27.2million of valuation adjustments to inventories of 50%-owned consolidated joint ventures. Required a. Would you consider the presentation to be a multiple-step income statement or a single-step income statement? Comment. b. Does it appear that there is a 100% ownership in all consolidated subsidiaries .c. If a subsidiary were not consolidated but rather accounted for using the equity method, would this change net earnings (loss)? Explain. d. Describe equity in loss from unconsolidated entities. e. Comment on Note 1. Does this note project favorably on the future of Lennar Corporation? Explain. f. Comment on Note 2. Why take an impairment for goodwill under financial services?
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