Annual report pursuant to Section 13 and 15(d)

Intangible Assets and Goodwill

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Intangible Assets and Goodwill
$ in Thousands
 12 Months Ended
Dec. 31, 2023
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets and Goodwill Goodwill and Intangible Assets
In accordance with ASC Topic 350, “Intangibles - Goodwill and Other,” we test goodwill for impairment at least annually (as of April 30 of each year) or more frequently if indications of impairment exist. The ASC also states that if an entity determines, based on the assessment of certain qualitative factors, that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative goodwill impairment test is unnecessary.
In performing a quantitative test for impairment of goodwill, we primarily use the income approach method of valuation that includes the DCF method that utilizes inputs, including projected revenues, margin, terminal growth rates, discount rates and a market capitalization reconciliation.
We completed our annual impairment testing as of April 30, 2023 and determined there was no impairment of goodwill.
In evaluating the recoverability of our indefinite lived franchise assets, we utilized a multi-period excess earnings method (“MPEEM”) model using unobservable inputs (Level 3) to estimate the fair value of the franchise assets for each of our franchises with recorded franchise assets. The significant assumptions in our MPEEM model include projected revenue, projected operating margins, a discount rate (and estimates in the discount rate inputs) and residual growth rates. We completed our annual impairment testing as of April 30, 2023 and determined there was no impairment of franchise assets.
The changes in the carrying amount of goodwill for 2023 and 2022 were as follows:
Franchised
Dealerships
Segment		 EchoPark Segment Powersports Segment Total
(In millions)
Balance at December 31, 2021 (1) $ 251.2  $ 165.2  $ —  $ 416.4 
Additions through current year acquisitions 5.1  —  9.2  14.3 
Reductions from impairment —  (202.9) —  (202.9)
Prior year acquisition allocations (34.5) 37.7  —  3.2 
Balance at December 31, 2022 (2) $ 221.8  $ —  $ 9.2  $ 231.0 
Additions through current year acquisitions —  —  11.9  11.9 
Reductions from dispositions (1.8) —  —  (1.8)
Prior year acquisition allocations 9.8  —  2.9  12.7 
Balance at December 31, 2023 (2) $ 229.8  $ —  $ 24.0  $ 253.8 
(1) Net of accumulated impairment losses of $1.1 billion related to the Franchised Dealerships Segment.
(2) Net of accumulated impairment losses of $1.1 billion and $202.9 million related to the Franchised Dealerships Segment and the EchoPark Segment, respectively.

The changes in the carrying amount of franchise assets for 2023 and 2022 were as follows:
  Franchised Dealerships Segment EchoPark Segment Powersports Segment
Total
(In millions)
Balance at December 31, 2021 $ 476.3  $ 3.9  $ —  $ 480.2 
Additions through current year acquisitions 10.0  —  23.1  33.1 
Reductions from dispositions (0.2) —  —  (0.2)
Reductions from impairment (114.4) (2.0) —  (116.4)
Balance at December 31, 2022 $ 371.7  $ 1.9  $ 23.1  $ 396.7 
Additions through current year acquisitions —  —  22.6  22.6 
Reductions from dispositions —  (1.9) —  (1.9)
Balance at December 31, 2023 $ 371.7  $ —  $ 45.7  $ 417.4 
Acquired RFJ Goodwill Allocated to EchoPark $ 177,100