Goodwill and Other Long-Lived Assets

9 Months Ended

Jun. 30, 2012

Goodwill and Other Long-Lived Assets

Goodwill and Other Long-Lived Assets

Note H — Goodwill and Other Long-Lived Assets

The Company records as goodwill the excess of purchase price over the fair value of the identifiable net assets acquired.  Goodwill and intangibles with indefinite useful lives are not amortized but the Company is required to perform, at a minimum, an annual assessment of the carrying value of goodwill and other intangibles with indefinite useful lives.  If the carrying value of goodwill or an intangible asset exceeds its fair value, an impairment loss will be recognized.  The Company has $4,181,000 of goodwill carrying value as of June 30, 2012 resulting from its acquisition in the UK of Rochester Medical Limited in 2006 and $4,679,000 of goodwill carrying value resulting from its acquisition in the Netherlands of Laprolan B.V. in 2011.  The Company tests annually for goodwill impairment of the asset, which is currently on June 2nd of each fiscal year, or more frequently if events and circumstances indicate that the asset might be impaired.  The Company performed its most recent annual goodwill impairment testing at June 2, 2012, and concluded that the goodwill was not impaired.  In the current reporting period, the Company did decrease the previously reported goodwill balance and deferred tax liabilities as of September 30, 2011 by $669,000 to record a deferred tax asset related to Laprolan that existed as of the acquisition date and which impacted purchase accounting and was treated as a correction of an immaterial error.

The recoverability of other long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset.  If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge would be recognized by the amount that the carrying amount of the asset exceeds the fair value of the asset.

Intangible assets with finite lives are amortized on a straight-line basis over the expected period to be benefited by future cash flows and are reviewed for impairment along with other long-lived assets when events or circumstances indicate that the carrying value may not be recoverable.  No such events or circumstances were noted during the current quarter.

The goodwill and intangible assets related to the Rochester Medical Limited and Laprolan B.V. acquisition are accounted for in British pounds and euros, respectively.  As a result, they are impacted by period-end rates of exchange to United States Dollars and therefore the reported balances in United States Dollars may vary in different reporting periods.