Note 10. Goodwill



	September 30, 2016		Effects of Foreign Currency Translation		September 30, 2017
Aerospace	$	455,423	$	-	$	455,423
Industrial		100,261		861		101,122
Consolidated	$	555,684	$	861	$	556,545

	September 30, 2015		Effects of Foreign Currency Translation		September 30, 2016
Aerospace	$	455,423	$	-	$	455,423
Industrial		101,554		(1,293)		100,261
Consolidated	$	556,977	$	(1,293)	$	555,684

Woodward tests goodwill for impairment at the reporting unit level on an annual basis and more often if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Woodward completed its annual goodwill impairment test as of July 31, 2017 during the quarter ended September 30, 2017. At that date, Woodward determined it was appropriate to aggregate certain components of the same operating segment into a single reporting unit. The fair value of each of Woodward’s reporting units was determined using a discounted cash flow method. This method represents a level 3 input and incorporates various estimates and assumptions, the most significant being projected revenue growth rates, earnings margins, future tax rates, and the present value, based on an estimated weighted-average cost of capital (or the discount rate) and terminal growth rate, of forecasted cash flows. Management projects revenue growth rates, earnings margins and cash flows based on each reporting unit’s current operational results, expected performance and operational strategies over a ten-year period. These projections are adjusted to reflect current economic conditions and demand for certain products, and require considerable management judgment.

Forecasted cash flows used in the July 31, 2017 impairment test were discounted using weighted-average cost of capital assumptions ranging from 9.57% to 13.86%. The terminal values of the forecasted cash flows were calculated using the Gordon Growth Model and assumed an annual compound growth rate after ten years of 3.39%. These inputs, which are unobservable in the market, represent management’s best estimate of what market participants would use in determining the present value of the Company’s forecasted cash flows. Changes in these estimates and assumptions can have a significant impact on the fair value of forecasted cash flows. Woodward evaluated the reasonableness of the reporting units’ resulting fair values utilizing a market multiple method.

The results of Woodward’s goodwill impairment tests performed as of July 31, 2017 did not indicate impairment of any of Woodward’s reporting units.