3. GOODWILL


	Goodwill		Accumulated impairment losses		Net
Amounts in thousands

Balance as of December 31, 2014	$	118,256	$	(91,125)	$	27,131
Transfer to assets held for sale		(840)		—		(840)
Balance as of December 31, 2015	$	117,416	$	(91,125)	$	26,291
Write-off related to sale of vessels		(2,994)		—		(2,994)
Impairment loss		—		(23,297)		(23,297)
Balance as of December 31, 2016	$	114,422	$	(114,422)	$	—

FASB ASC 350-20-35, Intangibles—Goodwill and Other, bases the accounting for goodwill on the units of the combined entity into which an acquired entity is integrated (those units are referred to as reporting units). A reporting unit is an operating segment as defined in FASB ASC 280, Disclosures about Segments of an Enterprise and Related Information, or one level below an operating segment. The Company’s current operations are principally managed on a vessel class basis. Each of the Company’s vessel classes serve the same type of customer, have similar operation and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. The Company has identified the reporting unit to be at the vessel class level.

The reporting structure is aligned to the internal management reporting presented to the chief operating decision maker.

FASB ASC 350-20-35 provides guidance for impairment testing of goodwill, which is not amortized. Other than goodwill, the Company does not have any other intangible assets that are not amortized. Goodwill is tested for impairment using a two-step process that begins with an estimation of the fair value of the Company’s reporting units. The first step is a screen for potential impairment and the second step measures the amount of impairment, if any. The first step involves a comparison of the estimated fair value of a reporting unit with its carrying amount. If the estimated fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is considered unimpaired.

Conversely, if the carrying amount of the reporting unit exceeds its estimated fair value, the second step is performed to measure the amount of impairment, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined by allocating the estimated fair value of the reporting unit to the estimated fair value of its existing assets and liabilities in a manner similar to a purchase price allocation. The unallocated portion of the estimated fair value of the reporting unit is the implied fair value of goodwill. If the implied fair value of goodwill is less than the carrying amount, an impairment loss, equivalent to the difference, is recorded as a reduction of goodwill and a charge to operating expense.

During the year ended December 31, 2016, change in vessel values during the interim period between December 31, 2015 and September 30, 2016, indicated circumstances changed that would more likely than not reduce the fair value of each reporting unit below its carrying amount. At September 30, 2016 and in accordance with ASC 350-20-35, the Company considered the continued decline in the fair value of the Company’s fleet independent valuations to be an indicators for goodwill impairment testing. Accordingly, at September 30, 2016, goodwill was tested for potential impairment. As a result of the goodwill impairment test performed, it was determined that the carrying value for each reporting unit was higher than its fair value and therefore goodwill was fully impaired, which resulted in a write-off at September 30, 2016 of $23.3 million. Additionally, during the year ended December 31, 2016, the Company recorded a $3.0 million goodwill write-off associated with the sales of Genmar Victory and Genmar Vision, which were sold in August 2016.

During the year ended December 31, 2015, it was determined that the fair value for each reporting unit was higher than the carrying value and therefore no goodwill impairment was recorded during the year ended December 31, 2015. Additionally, during the year ended December 31, 2015, the Company transferred $0.8 million of goodwill, related to the Gener8 Consul, to Assets held for sale in the consolidated balance sheet. See Note 5, Assets held for sale.

During the year ended December 31, 2014, the Company recorded a goodwill impairment charge of $2.1 million to goodwill. Additionally, goodwill associated with one Suezmax vessel, which was sold in July 2014, of $1.2 million was written-off during the year ended December 31, 2014.