Goodwill (Policies)

9 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

The changes in the carrying amount of goodwill by reporting unit during the fiscal years ended June 30, 2022 and September 30, 2021 were as follows:


	OSI Inc.		SSE		Heritage AspenTech		Total
Balance, September 30, 2020	$	—	$	77,000	$	—	$	77,000
Acquisition of OSI Inc.	967,383		—		—		967,383
Balance, September 30, 2021	967,383		77,000		—		1,044,383
Acquisition of Heritage AspenTech	—		—		7,222,799		7,222,799
Effect of Currency Translation	—		—		(373)		(373)
Balance, June 30, 2022	$	967,383	$	77,000	$	7,222,426	$	8,266,809

The increase in goodwill balances in fiscal year 2022 and 2021 were due to the Heritage AspenTech and OSI Inc. acquisitions, respectively. See Note 4, "Acquisitions".

In accordance with ASC 350, Intangibles - Goodwill and Other, the Company determined its reporting units based upon whether discrete financial information is available, if management regularly reviews the operating results of the component, the nature of the products offered to customers and the market characteristics of each reporting unit. On May 16, 2022, the Company completed the acquisition of Heritage AspenTech, resulting in the addition of a new operating segment and reporting unit.

The Company tests goodwill for impairment annually (or more often if impairment indicators arise), at the reporting unit level. the Company first assess qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determined based on this assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performed the goodwill impairment test. The first step requires the Company to determine the fair value of the reporting unit and compare it to the carrying amount, including goodwill, of such reporting unit. If the fair value exceeds the carrying amount, no impairment loss is recognized. However, if the carrying amount of the reporting unit exceeds its fair value, the goodwill of the unit is impaired.

Fair value of a reporting unit is determined using a combined weighted average of a market-based approach (utilizing fair value multiples of comparable publicly traded companies) and an income-based approach (utilizing discounted projected cash flows). In applying the income-based approach, the Company would be required to make assumptions about the amount and timing of future expected cash flows, growth rates and appropriate discount rates. The amount and timing of future cash flows would be based on the Company's most recent long-term financial projections. The discount rate the Company would utilize would be determined using estimates of market participant risk-adjusted weighted-average costs of capital and reflect the risks associated with achieving future cash flows.

The Company has elected May 31st as the annual impairment assessment date. The Company performed its annual impairment test for the Company as of May 31, 2022 and, based upon the results of its qualitative assessment, determined that it was not likely that its reporting units' fair values were less than their carrying amounts. As such, the Company did not recognize impairment losses as a result of its analysis. There were also no impairment losses recognized during fiscal 2021 and 2020. If an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value, goodwill will be evaluated for impairment between annual tests.