Grant Thornton LLP Letter Concerning Change in Depreciation Accounting Policy for Navarre Corporation

Summary

This letter from Grant Thornton LLP to the Board of Directors and Management of Navarre Corporation addresses the company's change in accounting policy for depreciating capital assets acquired after March 31, 2004. The company switched from an accelerated depreciation method to a straight-line method, believing it better reflects the assets' usage. Grant Thornton reviewed the change and agrees with management's judgment, noting the letter is provided solely for SEC compliance and should not be used for other purposes.

EX-10.85 5 c95938exv10w85.txt LETTER Exhibit 10.85 Board of Directors and Management Navarre Corporation As stated in Note 2 to the consolidated financial statements of Navarre Corporation and Subsidiaries (the "Company") for the year ended March 31,2005, the Company changed its accounting policy for the depreciation of capital assets acquired subsequent to March 31, 2004. Previously, the Company used an accelerated method to depreciate certain asset classes. The Company's new policy is to use the straight-line method for these assets. Management believes the newly adopted accounting principle is preferable in the circumstances because the straight-line method of depreciation more closely approximates the expected economic use of the capital assets since those assets are used uniformly over their service period instead of being used more in the years immediately after the asset is acquired. At your request, we have reviewed and discussed with management the circumstances, business judgment, and planning that formed the basis for making this change in accounting principle. It should be recognized that professional standards have not been established for selecting among alternative principles that exist in this area or for evaluating the preferability of alternative accounting principles. Accordingly, we are furnishing this letter solely for purposes of the Company's compliance with the requirements of the Securities and Exchange Commission, and it should not be used or relied on for any other purpose. Based on our review and discussion, we concur with management's judgment that the newly adopted accounting principle is preferable in the circumstances. In formulating this position, we are relying on management's business planning and judgment, which we do not find unreasonable. Very truly yours, /s/ GRANT THORNTON LLP