Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Other Intangible Assets

v3.7.0.1
Goodwill and Other Intangible Assets
6 Months Ended
Jun. 30, 2017
Goodwill And Intangible Assets Disclosure [Abstract]  
Intangible Assets and Goodwill

Note 4. Goodwill and Other Intangible Assets

Intangible Assets

Intangible assets include patented and unpatented technology, trade names, customer relationships and other specifically identifiable assets and are amortized on a straight-line basis over their respective estimated useful lives, which range from ten to twenty-five years.  Intangible assets are reviewed for impairment when facts and circumstances indicate a potential impairment has occurred.

There are three fundamental methods applied to value intangible assets outlined in FASB ASC 820, “Fair Value Measurement.” These methods include the Cost Approach, the Market Approach, and the Income Approach. Each of these valuation approaches were considered in the Company’s estimation of value.

Trade names and trademarks, patented and unpatented technology:  Valued using the Relief from Royalty method, a form of both the Market Approach and the Income Approach. Because the Company has established trade names and trademarks and has developed patented and unpatented technology, the Company estimated that the benefit of ownership as the relief from the royalty expense that would need to be incurred in absence of ownership.

Customer relationships: Because there is a specific earnings stream that can be associated with customer relationships, the Company determined the fair value of these relationships based on the excess earnings method, a form of the Income Approach.

Technology: The Company holds a number of U.S. patents covering its undercarriage technology. The key patent related to the Company’s Posi-Track undercarriage and suspension expires in 2023. The average estimated useful life for the Company’s patents is ten years, but useful life is determined in part by any legal, regulatory or contractual provisions that limit useful life. The Company has and will continue to dedicate technical resources toward the further development of our products and processes in order to maintain its competitive position.

Intangible assets, net comprised the following as of June 30, 2017:

 

 

 

Weighted

 

 

Gross

 

 

 

 

 

 

Net

 

 

 

Average Life

 

 

Carrying

 

 

Accumulated

 

 

Carrying

 

 

 

(In Years)

 

 

Amount

 

 

Amortization

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patents and unpatented technology

 

 

10

 

 

$

8,000

 

 

$

(2,026

)

 

$

5,974

 

Tradename and trademarks

 

 

25

 

 

 

7,000

 

 

 

(709

)

 

 

6,291

 

Customer relationships

 

 

11

 

 

 

16,000

 

 

 

(3,714

)

 

 

12,286

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

$

31,000

 

 

$

(6,449

)

 

$

24,551

 

 

Intangible assets, net comprised the following as of December 31, 2016:

 

 

 

Weighted

 

 

Gross

 

 

 

 

 

 

Net

 

 

 

Average Life

 

 

Carrying

 

 

Accumulated

 

 

Carrying

 

.

 

(In Years)

 

 

Amount

 

 

Amortization

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patents and unpatented technology

 

 

10

 

 

$

8,000

 

 

$

(1,627

)

 

$

6,373

 

Tradename and trademarks

 

 

25

 

 

 

7,000

 

 

 

(568

)

 

 

6,432

 

Customer relationships

 

 

11

 

 

 

16,000

 

 

 

(2,981

)

 

 

13,019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

$

31,000

 

 

$

(5,176

)

 

$

25,824

 

 

Amortization of other intangible assets for the six months ended June 30, 2017 and 2016 was $1,273 and $1,273, respectively.

Goodwill

Goodwill, representing the difference between the total purchase price and the fair value of assets (tangible and intangible) and liabilities at the date of acquisition, is reviewed for impairment annually, and more frequently as circumstances warrant, and written down only in the period in which the recorded value of such assets exceed their fair value. The Company selected September 30 as the date for the required annual impairment test.