Inventory

Inventory at October 31, 2015 and 2014 consisted of the following (amounts in thousands):



	2015		2014
Land controlled for future communities	$	75,214	$	122,533
Land owned for future communities	2,033,447		2,355,874
Operating communities	4,888,855		4,011,914
	$	6,997,516	$	6,490,321

Operating communities include communities offering homes for sale, communities that have sold all available home sites but have not completed delivery of the homes, communities that were previously offering homes for sale but are temporarily closed due to business conditions or non-availability of improved home sites and that are expected to reopen within 12 months of the end of the fiscal year being reported on, and communities preparing to open for sale. The carrying value attributable to operating communities includes the cost of homes under construction, land and land development costs, the carrying cost of home sites in current and future phases of these communities, and the carrying cost of model homes.

Communities that were previously offering homes for sale but are temporarily closed due to business conditions and that do not have any remaining backlog and are not expected to reopen within 12 months of the end of the fiscal period being reported on have been classified as land owned for future communities. Backlog consists of homes under contract but not yet delivered to our home buyers (“backlog”).

Information regarding the classification, number, and carrying value of these temporarily closed communities at October 31, 2015, 2014, and 2013, is provided in the table below ($ amounts in thousands):



	2015		2014		2013
Land owned for future communities:
Number of communities	15		16		25
Carrying value (in thousands)	$	119,138	$	122,015	$	153,498
Operating communities:
Number of communities	11		9		15
Carrying value (in thousands)	$	63,668	$	42,092	$	88,534

We provided for inventory impairment charges and the expensing of costs that we believed not to be recoverable in each of the three fiscal years ended October 31, 2015, 2014, and 2013, as shown in the table below (amounts in thousands):



Charge:	2015		2014		2013
Land controlled for future communities	$	809	$	3,123	$	1,183
Land owned for future communities	12,600
Operating communities	22,300		17,555		3,340
	$	35,709	$	20,678	$	4,523

See Note 12, “Fair Value Disclosures,” for information regarding the number of operating communities that we tested for potential impairment, the number of operating communities in which we recognized impairment charges, the amount of impairment charges recognized, and the fair value of those communities, net of impairment charges.

See Note 15, “Commitments and Contingencies,” for information regarding land purchase commitments.

At October 31, 2015, we evaluated our land purchase contracts to determine if any of the selling entities were VIEs, and, if they were, whether we were the primary beneficiary of any of them. Under these land purchase contracts, we do not possess legal title to the land; our risk is generally limited to deposits paid to the sellers; and the creditors of the sellers generally have no recourse against us. At October 31, 2015, we determined that 61 land purchase contracts, with an aggregate purchase price of $663.6 million, on which we had made aggregate deposits totaling $45.0 million, were VIEs and that we were not the primary beneficiary of any VIE related to our land purchase contracts. At October 31, 2014, we determined that 63 land purchase contracts, with an aggregate purchase price of $578.2 million, on which we had made aggregate deposits totaling $30.7 million, were VIEs, and that we were not the primary beneficiary of any VIE related to our land purchase contracts.

Interest incurred, capitalized, and expensed in each of the three fiscal years ended October 31, 2015, 2014, and 2013, was as follows (amounts in thousands):



	2015			2014			2013
Interest capitalized, beginning of year	$	356,180		$	343,077		$	330,581
Interest incurred	155,170			163,815			134,198
Interest expensed to cost of revenues	(142,947		)	(137,457		)	(112,321		)
Write-off against other income	(3,843		)	(5,394		)	(2,917		)
Interest capitalized on investments in unconsolidated entities	(7,467		)	(9,672		)	(6,464		)
Previously capitalized interest on investments in unconsolidated entities transferred to inventory	16,035			1,811
Interest capitalized, end of year	$	373,128		$	356,180		$	343,077

Inventory impairment charges are recognized against all inventory costs of a community, such as land, land improvements, cost of home construction, and capitalized interest. The amounts included in the table directly above reflect the gross amount of capitalized interest without allocation of any impairment charges recognized. We estimate that, had inventory impairment charges been allocated on a pro rata basis to the individual components of inventory, capitalized interest at October 31, 2015, 2014, and 2013, would have been reduced by approximately $32.7 million, $33.1 million, and $38.2 million, respectively.

During fiscal 2015, we transfered $132.3 million from investment in unconsolidated entities to inventory. See Note 4, “Investments in and Advances to Unconsolidated Entities - Homebuilding Joint Ventures” for additional information.

During fiscal 2014, we contributed $4.2 million of inventory and other assets to several unconsolidated entities.

During fiscal 2014, we reclassified $9.5 million of inventory related to commercial retail space located in our high-rise projects to property, construction, and office equipment. The amounts were reclassified due to the substantial completion of these projects.