Envela Corp Goodwill & Intangibles Disclosure
NOTE 6 — GOODWILL
The changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021, are as follows:
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| Year Ended December 31, |
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| 2022 |
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| 2021 |
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| Opening balance |
| $ | 6,140,465 |
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| $ | 1,367,109 |
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| Additions (reductions) (1) |
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| (2,519,012 | ) |
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| 4,773,356 |
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| $ | 3,621,453 |
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| $ | 6,140,465 |
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(1) Additions for Fiscal 2021 totaling $4,773,356 is a combination of the CExchange Transaction on June 9, 2021 of $1,282,072 and the Avail Transaction’s preliminary purchase price allocation on October 29, 2021, of $3,491,284. The reduction in goodwill of $2,519,012 for Fiscal 2022, is a combination of an additional cash payment made on May 31, 2022 of $216,988, which increased goodwill for the Avail Transaction, offset by the reduction of goodwill related to the Avail Transaction by management identifying $2,736,000 of intangible assets that were not initially included in the fair value of Avail’s net assets, reducing goodwill and increasing intangible assets.
The Company’s goodwill is related to the ECHG segment. Goodwill is evaluated for impairment annually in the fourth quarter, or when there is reason to believe that the value has been diminished or impaired. Based on the Company’s evaluations, no impairment was required as of December 31, 2022 and 2021.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2022 | Mar 16, 2023 | Showing above |
| 2021 | Mar 16, 2022 | |
| 2020 | Mar 23, 2021 | |
| 2019 | Mar 26, 2020 | |
| 2018 | Apr 12, 2019 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.