Annual report pursuant to Section 13 and 15(d)

Note 9 - Goodwill and Other Intangible Assets

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Note 9 - Goodwill and Other Intangible Assets
12 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Goodwill and Intangible Assets Disclosure [Text Block]
(
9
)
Goodwill and Other Intangible Assets
 
Our goodwill and intangible assets are comprised of goodwill, which represents the excess of cost over the fair value of net assets acquired, and our Ethan Allen trade name and related trademarks. Both goodwill and indefinite-lived intangible assets are
not
amortized as they are estimated to have an indefinite life. At both
June 30, 2020
and
2019,
we had
$25.4
million of goodwill and
$19.7
million of other indefinite-lived intangible assets, all of which is in our wholesale segment.
 
We test our wholesale goodwill and indefinite-lived intangibles for impairment on an annual basis in the
fourth
quarter of each fiscal year, and more frequently if events or changes in circumstances indicate that it might be impaired. Due to the economic conditions during the
third
quarter of fiscal
2020
as a result of the COVID-
19
pandemic, we determined that an impairment triggering event occurred, which required an interim quantitative impairment assessment of goodwill and intangible assets. Based on the Company's interim quantitative assessment performed as of
March 31, 2020,
the fair value of the wholesale reporting unit exceeded our related carrying value by approximately
25%,
thus
no
impairment of goodwill. We also performed our annual qualitative goodwill impairment test during the
fourth
quarter of fiscal
2020,
consistent with the timing of previous years, and concluded their remained
no
impairment.
 
The fair value of our trade name, which is the Company's only indefinite-lived intangible asset other than goodwill, was also reviewed as of
March 31, 2020
for impairment. We performed the interim trade name impairment test and concluded that its fair value substantially exceeded the carrying value as of
March 31, 2020,
thus
no
impairment. We also performed our annual trade name impairment test during the
fourth
quarter of fiscal
2020,
consistent with the timing of previous years, and concluded that there was
no
impairment.
 
If the market valuation of our common shares or operating results within the wholesale reporting unit significantly decline beyond current levels, we
may
again need to conduct an evaluation of the fair value of our goodwill and trade name, which
may
result in an impairment charge.