Where Food Comes From, Inc. Goodwill & Intangibles Disclosure
Note 7 – Goodwill
Changes in the net carrying value of goodwill by segment are as follows (in thousands):
Verification and Certification Segment |
Software Sales and Related Consulting Segment |
Consolidated | ||||||||||
| January 1, 2020 | $ | 1,133 | $ | 1,813 | $ | 2,946 | ||||||
| Transfer of assets | 814 | (814 | ) | - | ||||||||
| December 31, 2020 | $ | 1,947 | $ | 999 | $ | 2,946 | ||||||
| Transfer of assets | - | - | - | |||||||||
| December 31, 2021 | $ | 1,947 | $ | 999 | $ | 2,946 | ||||||
Annual Impairment Test of Goodwill
We performed a qualitative assessment on our WFCFO, Validus and SureHarvest, reporting units for our 2021 annual test and concluded that it was more-likely-than-not that the fair value of the reporting unit exceeded its carrying value and, therefore, a two-step impairment test was not necessary. The qualitative assessment compares current performance, expectations and other indicators against what was expected as part of the most recent Step 1 valuation. Consequently, the key estimates and assumptions related to the most recent Step 1 valuation pertaining to this reporting unit had not changed since our previous annual report.
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2021 | Feb 28, 2022 | Showing above |
| 2020 | Feb 18, 2021 | |
| 2018 | Mar 29, 2019 | |
| 2017 | Apr 2, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 16, 2016 | |
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.