INTANGIBLE ASSETS AND GOODWILL

Goodwill represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired in a business combination and is not amortized. We review goodwill for impairment on an annual basis during the fourth quarter of each fiscal year, or whenever a triggering event occurs or circumstances change that could reduce the fair value of a reporting unit below its carrying amount. In making such assessment, qualitative factors are used to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the estimated fair value of the reporting unit is less than its carrying value, then an impairment charge is recorded.

In connection with the purchase of MacArthur Place, we allocated a portion of the total purchase price to certain intangible assets and goodwill. Of the total $16.3 million allocated to purchased intangibles, $15.4 million, $0.8 million, and $0.1 million, were allocated to goodwill, customer relationships, and trade name and other, respectively.

The changes in the carrying amount of intangibles and goodwill allocated to our Hospitality and Entertainment Operations segment for the three months ended March 31, 2020 is as follows (in thousands):



	Goodwill		Other intangibles, net
Balance at December 31, 2019	$	15,357	$	361
Reductions:
Amortization expense	—		(70		)
Balance at March 31, 2020	$	15,357	$	291

A summary of our intangible assets and goodwill as of March 31, 2020 and December 31, 2019 is as follows (in thousands):



	Gross Carrying Amount				Accumulated Amortization						Net Carrying Amount
	March 31,		December 31,		March 31,			December 31,			March 31,		December 31,
	2020		2019		2020			2019			2020		2019
Non-amortizing intangible assets:
Goodwill	$	15,357	$	15,357	$	—		$	—		$	15,357	$	15,357
Liquor license	100		100		—			—			100		100
Amortizing intangible assets:
Customer relationships	800		800		(667		)	(600		)	133		200
Trade name and other	90		90		(32		)	(29		)	58		61
	$	16,347	$	16,347	$	(699	)	$	(629	)	$	15,648	$	15,718

Trade name and other, and customer relationships have weighted-average useful lives from the date of purchase of 7.0 years and 3.0 years, respectively. Goodwill and our liquor license are not subject to amortization due to the indeterminable life of such assets. Amortization expense relating to our purchased intangible assets was $0.1 million for each of the three months ended March 31, 2020 and 2019, respectively.

Impairment Considerations

Management considers the impact of COVID-19 coupled with the hotel’s inception-to-date losses incurred to be a triggering event under current accounting guidance, thereby causing us to perform a goodwill impairment analysis for the quarter ended March 31, 2020. The Company has decided to bypass the qualitative assessment and proceed directly to the simplified one step goodwill impairment test allowed by the implementation of ASU 2017-04.

To estimate the fair value of the reporting units, we use a discounted cash flow model and data regarding market comparables. The valuation process requires significant judgment and involves the use of significant estimates and assumptions. These assumptions include cash flow projections, and estimated capitalization and discount rates. Because assumptions and estimates are used in projecting future cash flows and selecting appropriate capitalization and discount rates, actual results may materially differ from our estimates under different assumptions or conditions. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is deemed not to be impaired.

In performing its assessment, the Company reviewed macro- and microeconomic and market factors, industry-specific forecasts, and other applicable market data to influence our selection of appropriate assumptions for the discounted cash flows analysis, as well as a performing a sensitivity analysis on those assumptions and results. The results of our discounted cash flow analysis indicate that the fair value of the hospitality and entertainment reporting unit exceeds its carrying value as of March 31, 2020. In addition, despite the adverse economic and highly uncertain environment caused by the pandemic, the Company believes that, as of March 31, 2020, the longer-term outlook of the hospitality market, and specifically, the local submarket in which MacArthur Place operates, remains positive. Accordingly, the Company believes that the fair value of its goodwill reporting unit remains greater than its carrying value and has not recorded impairment to goodwill for the three months ended March 31, 2020.

The full impact of the COVID-19 outbreak continues to evolve as of the date of our quarterly reporting. The extent to which the Company’s business may be affected by the current outbreak of the COVID-19 outbreak will largely depend on both current and future developments, including its duration, spread and treatment, and related travel advisories and restrictions, which could impact overall demand in the hospitality industry, all of which are highly uncertain and cannot be reasonably predicted at this time. Management will continue to monitor the situation as events unfold and assess any potential further impairment triggers.