Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

The components of Goodwill and other intangible assets, net were as follows:



	December 31, 2019		December 31, 2018
Goodwill	$	78,008	$	77,568

Indefinite life intangibles:
Intangible asset associated with benefit under the MSA	107,511		107,511
Trademark - Douglas Elliman	80,000		80,000

Intangibles with a finite life, net	474		1,532

Total goodwill and other intangible assets, net	$	265,993	$	266,611

Goodwill is evaluated for impairment annually or whenever we identify certain triggering events or circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Events or circumstances that might indicate an interim evaluation is warranted include, among other things, unexpected adverse business conditions, macro and reporting unit specific economic factors (for example, interest rate and foreign exchange rate fluctuations, and loss of key personnel), supply costs, unanticipated competitive activities, and acts by governments and courts.

The Company follows ASC 350, Intangibles -- Goodwill and Other, included in ASU 2011-08, Testing Goodwill for Impairment. The Company elected to bypass the qualitative assessment and performed the quantitative assessment for the year ended December 31, 2019. No impairment was indicated as a result of this testing. If the Company fails to meet the financial projections used in the quantitative assessment of goodwill in future periods, this could result in an impairment charge related to the Company’s goodwill.

Other intangible assets and contract liabilities assumed were as follows:



	Useful Lives in Years	December 31, 2019			December 31, 2018
Intangible asset associated with benefit under the MSA	Indefinite	$	107,511		$	107,511

Trademark - Douglas Elliman	Indefinite	80,000			80,000

Favorable leases	1 - 10	—			13,444
Other intangibles	1 - 5	4,689			1,724
		4,689			15,168
Less: Accumulated amortization on amortizable intangibles		(4,215		)	(13,636		)
Other intangibles, net		$	474		$	1,532

Contract liabilities assumed:

Unfavorable leases	1 - 10	$	—		$	4,022
Less: Accumulated amortization on unfavorable leases		—			(3,076		)
Unfavorable leases, net		$	—		$	946

The intangible asset associated with the benefit under the MSA relates to the market share payment exemption of The Medallion Company Inc. (now known as Vector Tobacco Inc.), acquired in April 2002, under the MSA, which states payments

under the MSA continue in perpetuity. As a result, the Company believes it will realize the benefit of the exemption for the foreseeable future.

The fair value of the intangible asset associated with the benefit under the MSA is determined using discounted cash flows. This approach involves two steps: (i) estimating future cash savings due to the payment exemption under the MSA and (ii) and discounting the resulting cash flow savings to determine fair value. This fair value is then compared with the carrying value of the intangible asset associated with the benefit under the MSA. To the extent that the carrying amount exceeds the implied fair value of the intangible asset, an impairment loss is recognized. The Company performed its impairment test for the year ended December 31, 2019 and no impairment was noted.

The trademark intangible is attributed to the acquisition of the Douglas Elliman brand name which the Company plans to continue using for the foreseeable future. The fair value of the intangible asset associated with the Douglas Elliman trademark is determined using a “relief from royalty payments” method. This approach involves two steps: (i) estimating reasonable royalty rates for its Douglas Elliman trademark and (ii) applying these royalty rates to a net sales stream and discounting the resulting cash flows to determine fair value. This fair value is then compared with the carrying value of the trademark. The Company performed the quantitative assessment for the year ended December 31, 2019 and no impairment was noted. In future periods if there is a decrease in the royalty rate that was used in the quantitative assessment or if the financial projections used in the quantitative assessment are not met, this could result in an impairment charge related to the Douglas Elliman trademark.

As of December 31, 2019, other intangibles with finite lives included non-compete agreements recognized in prior business combinations. Other intangibles in prior periods included backlog and listing inventory for Development sales, and favorable and unfavorable leases arising from leases with terms that are less than or greater than market value assumed in the business combination.

For the years ended December 31, 2019, 2018, and 2017, respectively, amortization of other intangibles were $182, $806 and $871. For the years ended December 31, 2018 and 2017, respectively, $1,175 and $1,373 was taken as rent expense for amortization of favorable leases, and $369 and $502 was taken as offsets to rent expense for amortization of unfavorable leases. The Company did not recognize rent expense for amortization of favorable or unfavorable leases due to the adoption of ASU 2016-02 - Leases (Topic 842) in 2019.