Goodwill (Notes)

3 Months Ended

Mar. 31, 2020

Goodwill [Abstract]

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

Goodwill

Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired and liabilities assumed in business combinations. In connection with the Company’s acquisition of the homebuilding assets and operations of Pinnacle Homes in Detroit, Michigan in March of 2018, the Company recorded goodwill of $16.4 million, which is included as Goodwill in our Consolidated Balance Sheets. This amount was based on the estimated fair values of the acquired assets and liabilities at the date of the acquisition in accordance with ASC 350.

In accordance with ASC 350, the Company analyzes goodwill for impairment on an annual basis (or more often if indicators of impairment exist). The Company performs a qualitative assessment to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment indicates that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, then a quantitative assessment is performed to determine the reporting unit’s fair value. If the reporting unit’s carrying value exceeds its fair value, then an impairment loss is recognized for the amount of the excess of the carrying amount over the reporting unit’s fair value. The Company performed its annual goodwill impairment analysis during the fourth quarter of 2019, and as no indicators for impairment existed at December 31, 2019, no impairment was recorded. As a result of the temporary shut-down of our Detroit operations due to COVID-19 (as the state of Michigan does not deem housing construction an essential business), we performed a goodwill impairment analysis of our Detroit reporting unit and determined no impairment existed at March 31, 2020. However, we will continue to monitor the fair value of the reporting unit in future periods if conditions worsen, operations are not permitted to re-open, or other events occur that could impact the fair value of the reporting unit.