2.	Recently Issued Accounting Standards

May

2014,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2014

09,

Revenue from Contracts with Customers

("ASU

2014

09"),

which is a comprehensive new revenue recognition model. Under ASU

2014

09,

a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. ASU

2014

is effective for our interim and annual reporting periods beginning

January

2018,

and is to be adopted using either a full retrospective or modified retrospective transition method. Early adoption is permitted only as of annual reporting periods beginning after

December

15,

2016,

including interim reporting periods within that reporting period. We expect to adopt the new standard under the modified retrospective approach in the

2018

first

quarter. Although we are still in the process of evaluating our contracts, we do not believe the adoption of ASU

2014

will have a material impact on the amount or timing of our recognition of revenues. While we are still evaluating the accounting for marketing costs under ASC

606,

there is a possibility that the adoption of ASU

2014

will impact the timing of recognition and classification in our consolidated financial statements of certain marketing costs we incur to obtain sales contracts from our customers. For example, there are various marketing costs that we currently capitalize and amortize with each home delivered in a community. Under the new guidance, these costs

may

need to be expensed immediately. We are continuing to evaluate the exact impact ASU

2014

will have on recording revenue and our marketing costs in our consolidated financial statements and related disclosures.

January

2016,

the FASB issued ASU

2016

01,

Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities

(“ASU

2016

01”),

which makes a number of changes to the current GAAP model, including changes to the accounting for equity investments and financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under ASU

2016

01,

we will primarily be impacted by the changes to accounting for equity instruments with readily determinable fair values as they will no longer be permitted to be classified as available-for-sale (changes in fair value reported through other comprehensive income) and instead, all changes in fair value will be reported in earnings. ASU

2016

is effective for our interim and annual reporting periods beginning

January

2018

and is to be applied using a modified retrospective transition method. Early adoption of the applicable guidance from ASU

2016

is not permitted. Given the significant amount of our investments in equity securities, and assuming we still have a similar level of investments when this guidance is adopted, we would expect that the impact to our consolidated statements of operations and comprehensive income from this update could be material. Furthermore, depending on trends in the stock market, we

may

see increased volatility in our consolidated statements of operations and comprehensive income.

February

2016,

the FASB issued ASU

2016

02,

Leases

(“ASU

2016

02”),

which requires a lessee to recognize a right-of-use asset and a corresponding lease liability for virtually all leases. The liability will be equal to the present value of the remaining lease payments while the right-of-use asset will be based on the liability, subject to adjustment, such as for initial direct costs. In addition, ASU

2016

expands the disclosure requirements for lessees. Upon adoption, we will be required to record a lease asset and lease liability related to our operating leases. ASU

2016

is effective for our interim and annual reporting periods beginning

January

2019

and is to be applied using a modified retrospective transition method. Early adoption is permitted. We do not plan to early adopt the guidance and we are currently evaluating the impact the update will have on our consolidated financial statements and related disclosures.

March

2016,

the FASB issued ASU

2016

09,

Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting

(“ASU

2016

09”),

which amends ASC Topic

718,

Compensation – Stock Compensation

(“ASC

718”).

The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the accounting for income taxes, classification of excess tax benefits on the statement of cash flows, forfeitures, statutory tax withholding requirements, classification of awards as either equity or liabilities, and classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. ASU

2016

became effective for us in the

2017

first

quarter.

The primary impact from this guidance, on a prospective basis, will be to our provision for income taxes line item on our consolidated statements of operations and comprehensive income. Any excess tax benefits or deficiencies from

(1)

the exercise or expiration of options or

(2)

the vesting of stock awards will now be recognized through our income tax provision as opposed to additional paid-in capital (to the extent we had a sufficient pool of windfall tax benefits). As a result of exercises of stock options and vesting of stock awards during the

three

months ended

March

31,

2017,

$0.1

million excess tax benefit was recognized in our tax provision. Furthermore, as of

March

31,

2017,

we had options covering approximately

575,000

(1)

with exercise prices above the MDC closing share price at

March

31,

2017

and

(2)

that will have their ability to exercise expire at some point during

2017.

If the exercise price continues to be greater than the share price of MDC throughout

2017,

these options will likely expire unexercised and as a result, we could recognize approximately

$2.7

million in additional expense in our provision for income taxes line item on our consolidated statements of operations and comprehensive income in

2017.

Another provision of ASU

2016

that is relevant to the Company is the classification of excess tax benefits on the statement of cash flows, which was adopted on a prospective basis as such, prior periods have not been adjusted. This provision did not have a material effect on the statement of cash flows and is not expected to have a material impact on the statement of cash flows in future quarterly or annual filings. Adoption of ASU

2016

was not material to our statement of cash flows for the periods presented and we do not anticipate it will be material in

2017.

June

2016,

the FASB issued ASU

2016

13,

Financial Instruments—Credit Losses (Topic

326):

Measurement of Credit Losses on Financial Instruments

(“ASU

2016

13”),

which requires measurement and recognition of expected credit losses for financial assets held. The amendments in ASU

2016

eliminate the probable threshold for initial recognition of a credit loss in current GAAP and reflect an entity’s current estimate of all expected credit losses. ASU

2016

is effective for our interim and annual reporting periods beginning

January

2021,

and is to be applied using a modified retrospective transition method. Earlier adoption is permitted.

We do not plan to early adopt ASU

2016

and with our current holdings of financial instruments that are subject to credit losses, we do not believe adoption of this guidance will be material to our financial statements.

August

2016,

the FASB issued ASU

2016

15,

tatement of Cash Flows (Topic

230):

Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)

(“ASU

2016

15”),

which amends ASC Topic

230

, Statement of Cash Flows

, to clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. The amendments in ASU

2016

are intended to reduce diversity

in practice in how certain transactions are classified in the statement of cash flows

. ASU

2016

is effective for our interim and annual reporting periods beginning

January

2018,

and is to be applied using a retrospective transition method. Earlier adoption is permitted.

We do not plan to early adopt ASU

2016

and do not believe the guidance will have a material impact on our financial statements upon adoption.

November

2016,

the FASB issued ASU

2016

18,

Statement of Cash Flows (Topic

230):

Restricted Cash

consensus of the

FASB

Emerging Issues Task Force

(“ASU

2016

18”),

which requires restricted cash to be included with cash and cash equivalents when reconciling the beginning and ending amounts on the statement of cash flows. ASU

2016

is effective for our interim and annual reporting periods beginning

January

2018,

and is to be applied using a retrospective transition method. Earlier adoption is permitted.

We do not plan to early adopt ASU

2016

and do not believe the guidance will have a material impact on our financial statements upon adoption.