Goodwill and Amortizable Intangible Assets

3 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Amortizable Intangible Assets

There have been no changes to the carrying amount of goodwill during the three month period ended March 31, 2015.

Wave tests goodwill for impairment annually on September 30 and during interim periods whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Wave uses a fair value approach in testing goodwill for impairment in accordance with the provisions of ASC Topic 350, Intangibles—Goodwill and Other. The goodwill impairment test involves a two-step process. In the first step, we compare the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, we must perform the second step of the impairment test to measure the amount of impairment loss. In the second step, the reporting unit's fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than the carrying value, the difference is recorded as an impairment loss.

The Company estimates the fair value of its reporting units using the income approach. Under the income approach, the Company calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business’ ability to execute on the projected cash flows. The inputs used for the income approach are significant unobservable inputs, or Level 3 inputs, as described in ASC Topic 820, Fair Value Measurement.

When indicators of impairment are present, such as those noted above, the Company tests long-lived assets (other than goodwill) for recoverability by comparing the carrying value of an asset group to the estimated undiscounted future cash flows expected to be generated by the asset group, including its ultimate disposition.

The following schedule presents intangible assets subject to amortization as of March 31, 2015 and December 31, 2014:

March 31, 2015



Intangible Asset	Gross Carrying Amount		Accumulated Amortization			Accumulated Impairment Loss			Net		Weighted Average Remaining Useful Life (in years)
Developed Technology	$	6,426,000	$	(1,298,671	)	$	(5,038,100	)	$	89,229	3.5
Customer Relationships	3,972,000		(937,327		)	(1,786,673		)	1,248,000		6.5
Internal-use software	726,000		(219,010		)	—			506,990		3.5
Acquired Patents	1,100,000		(1,081,666		)	—			18,334		0.1
	$	12,224,000	$	(3,536,674	)	$	(6,824,773	)	$	1,862,553

December 31, 2014



Intangible Asset	Gross Carrying Amount		Accumulated Amortization			Accumulated Impairment Loss			Net		Weighted Average Remaining Useful Life (in years)
Developed Technology	$	6,426,000	$	(1,292,297	)	$	(5,038,100	)	$	95,603	3.8
Customer Relationships	3,972,000		(889,327		)	(1,786,673		)	1,296,000		6.8
Internal-use software	726,000		(182,710		)	—			543,290		3.8
Acquired Patents	1,100,000		(1,026,666		)	—			73,334		0.4
	$	12,224,000	$	(3,391,000	)	$	(6,824,773	)	$	2,008,227

Amortization expense associated with intangible assets was $145,674 for the three months ended March 31, 2015 and 2014. The estimated amortization expense for intangible assets for the next five years and thereafter is as follows (in thousands):



Period	Estimated Amortization Expense
Remainder of 2015	$	290,354
2016	362,694
2017	362,694
2018	318,811
2019	192,000
Thereafter	336,000
Total	$	1,862,553

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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