Greenidge Generation Holdings Inc. Goodwill & Intangibles Disclosure
7. GOODWILL
Changes in the carrying amount of goodwill for the year ended December 31, 2021 were as follows:
$ in thousands |
|
|
|
|
Balance December 31, 2020 |
|
$ |
- |
|
Support acquisition (Note 3) |
|
|
45,369 |
|
Impairment charge – Fourth Quarter (see below) |
|
|
(42,307 |
) |
Balance December 31, 2021 |
|
$ |
3,062 |
|
As described in Notes 1 and 3, on September 14, 2021 Greenidge and Support.com combined their respective businesses through an all-stock merger transaction that was accounted for as a business combination in accordance with ASC 805. Prior to the Merger, Greenidge did not have any goodwill.
Greenidge performed its annual goodwill impairment test at December 31, 2021. The test concluded that the fair value of the Support Services reporting unit was less than its carrying value (including goodwill), and that a portion of the Company’s goodwill was impaired. Accordingly, the Company recorded a non-cash goodwill impairment charge of $42.3 million in its consolidated statement of operations for the year ended December 31, 2021, in the caption, Goodwill impairment charge. In making this determination, the Company updated its discounted cash flow analysis, including updated business projections and weighted average cost of capital factors, as well as other valuation methodologies such as comparisons with similar companies and industry multiples.
Prior to completing the annual goodwill impairment test, the Company tested the recoverability of definite-lived intangible assets and concluded that they were not impaired (See Note 8).
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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.