GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS:

GOODWILL - Goodwill represents future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration paid or transferred over the fair value of identifiable net assets acquired. Goodwill is not amortized, but instead is subject to impairment testing on an annual basis, and between annual tests whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying amount.

The Company performs its annual goodwill impairment test in the fourth quarter of each fiscal year beginning with a qualitative assessment at the reporting unit level. The reporting unit level is identified by assessing whether the components of our operating segments constitute businesses for which discrete financial information is available, whether segment management regularly reviews the operating results of those components and whether the economic and regulatory characteristics are similar. Factors utilized in the qualitative analysis performed on goodwill in our reporting units include, among other things, macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, company specific operating results and other relevant entity-specific events affecting individual reporting units.

In the absence of sufficient qualitative factors, goodwill impairment is determined using a two-step process. Step one identifies potential impairment by comparing the fair value of a reporting unit to the book value, including goodwill. The Company estimates the fair value of a reporting unit using a discounted cash flow analysis. Management also considers other methods, which includes a market multiples analysis. Determining the fair value of a reporting unit requires judgment and the use of significant estimates and assumptions. Such estimates and assumptions include, but are not limited to, forecasts of future operating results, discount and growth rates, capital expenditures, tax rates, and projected terminal values. Changes in estimates or the application of alternative assumptions could produce significantly different results. If the fair value exceeds book value, goodwill of the reporting unit is not considered impaired. If the book value exceeds fair value, proceed to step two, which compares the implied fair value of the reporting unit's goodwill to the book value of the reporting unit goodwill. If the book value of goodwill exceeds the implied fair value, an impairment charge is recognized for the excess.

Total goodwill of $734.6 million and $3.6 million is recorded on the consolidated balance sheets as of December 31, 2018 and 2017, respectively. The increase was due to consideration transferred in excess of the fair value of the identifiable net assets acquired as a result of the Acquisition (see Note 20). Of the total $734.6 million balance as of December 31, 2018, $730.9 million is included in the ETG Utility Operations segment, $3.6 million is included in the On-Site Energy Production segment, and $0.1 million is included in the ELK Utility Operations segment. The $3.6 million balance as of December 31, 2017 was included in the On-Site Energy Production segment. SJG does not have any goodwill.

The Company performed its 2018 annual goodwill impairment assessment and concluded that the fair value of all reporting units containing goodwill exceeded their respective carrying values.

In connection with the 2017 annual goodwill impairment assessment, the Company performed a qualitative assessment over its business units and noted that as a result of the continuing cash flow losses incurred at the LFGTE's business unit, the two-step impairment test was necessary during 2017. Based on the results of the goodwill impairment test, the Company determined that the carrying value of the LFGTE's reporting unit was higher than the fair value, and accordingly, the Company recognized a pre-tax impairment charge of $1.3 million during the year ended December 31, 2017, recorded in Impairment Charges on the consolidated statements of income and included in the Company's On-Site Energy Production segment.

The Company concluded based on the results of the annual testing performed that, other than the impairment charges noted above, there were no other impairments identified for the years ended December 31, 2018 and 2017.

The following table summarizes the changes in goodwill for the years ended December 31, 2018 and 2017, respectively (in thousands):



	2018			2017
Beginning Balance, January 1	$	3,578		$	4,838
Impairment of Goodwill	—			(1,260		)
Goodwill from Acquisition	756,247			—
Fair Value Adjustments During Measurement Period	(25,218		)	—
Ending Balance, December 31	$	734,607		$	3,578

IDENTIFIABLE INTANGIBLE ASSETS - The primary identifiable intangible assets of the Company are customer relationships and the AMA (see Note 1). The Company determines the useful lives of identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Considerations may include the contractual term of any agreement related to the asset, the historical performance of the asset, the Company's long-term strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset, and other economic factors, including competition and specific market conditions. Intangible assets that are deemed to have definite lives (finite-lived intangible assets) are amortized, primarily on a straight-line basis, over their useful lives, generally ranging from 2 to 20 years.

The cost of identifiable intangible assets of $28.1 million and $12.5 million are included in Other Noncurrent Assets on the consolidated balance sheets as of December 31, 2018 and 2017, respectively. The increase is attributable to the AMA purchased in July 2018 (see Note 1), partially offset by amortization recorded in 2018. In 2017, SJI recorded a $2.2 million pre-tax impairment charge specific to the LFGTE assets customer relationships, which was primarily driven by revised assumptions for decreased electric production and increased operating expenses, and was recorded in Impairment Charges on the consolidated statements of income, and in the Company's On-Site Energy Production segment. No impairment charges were recorded on identifiable intangible assets in 2018. SJG does not have any identifiable intangible assets.