Long-Lived Assets

12 Months Ended

Dec. 31, 2020

Impairment or Disposal of Tangible Assets Disclosure [Abstract]

Long-Lived Assets

Long-Lived Assets:

Long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. In order to determine if an asset has been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in expected future cash flows; a sustained, significant decline in equity price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on the consolidated financial statements.

Non-operating assets are evaluated for impairment based on changes in market conditions. When changes in market conditions are observed, impairment is estimated using a market-based approach. If the estimated fair value of the non-operating assets is less than their carrying value, an impairment charge is recorded for the difference.

Due to the negative effects of the COVID-19 pandemic on our expected future operating results, we tested our long-lived assets for impairment as of March 29, 2020 and September 27, 2020. As of March 29, 2020, we concluded the estimated undiscounted future cash flows expected to result from the use of the long-lived assets at the Schlitterbahn parks no longer exceeded the related carrying values. Therefore, we recorded a $2.7 million impairment charge equal to the difference between the fair value and the carrying amounts of the assets in "Loss on impairment / retirement of fixed assets" within the consolidated statement of

operations and comprehensive (loss) income during the first quarter of 2020. The fair value of the long-lived assets was determined using a real and personal property appraisal which was performed in accordance with ASC 820 - Fair Value Measurement. We performed additional impairment testing as of September 27, 2020 due to a further decline in our financial performance projections. Our impairment testing as of September 27, 2020 resulted in no further impairment of our long-lived assets. Management made significant estimates in performing these impairment tests, including the anticipated time frame to re-open our parks following the COVID-19 pandemic and the related anticipated demand upon re-opening our parks following the COVID-19 pandemic. Actual results could materially differ from these estimates depending on the ultimate extent of the effects of the COVID-19 pandemic.

During the third quarter of 2016, we ceased operations of one of our separately gated outdoor water parks, Wildwater Kingdom, located near Cleveland in Aurora, Ohio. At the date that Wildwater Kingdom ceased operations, the only remaining long-lived asset was approximately 670 acres of land. The Wildwater Kingdom acreage, reduced by acreage sold, is recorded within "Other Assets" in the consolidated balance sheets ($2.1 million as of December 31, 2020 and $9.0 million as of December 31, 2019).