Intangibles Assets (Notes)
|9 Months Ended|
Dec. 31, 2019
|Goodwill and Intangible Assets Disclosure [Abstract]|
|Intangible Assets Disclosure [Text Block]||
Intangible assets include customer relationships, trade names, developed technology and other intangibles. Intangible assets with determinable lives are amortized over their estimated useful lives. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying amount over its fair value.
There was no intangible asset impairment during the nine months ended December 31, 2019, or the nine months ended December 31, 2018.
Product Licensing Rights
On July 31, 2019, the Company entered into a five year License and Service Agreement with a public safety manufacturing company pursuant to which the Company obtained worldwide product licensing rights for existing products to be manufactured at our contract manufacturer for our IBW segment (the "Agreement"). Under the terms of the Agreement, the Company made an up-front payment of $1.0 million during the quarter ended September 30, 2019, in connection with the execution of the agreement. The Company will pay an additional $1.0 million, which is presented in Accounts Payable on the Condensed Consolidated Balance Sheet as of December 31, 2019, upon the achievement of a certain milestone, as well as royalties on future sales. In addition to the product licensing rights, the initial $1.0 million up-front payment includes training. The newly acquired product licensing rights will be amortized straight-line over the term of the Agreement. The amortization related to this intangible asset is presented in Cost of revenue on the Condensed Consolidated Statements of Operations during the three and nine months ended December 31, 2019.
The Agreement also contains possible future product licensing rights for a product that is still being developed. Once development is complete, and the licensed know-how is transferred to our contract manufacturer, a third payment of $250,000 would be payable. Westell had not recorded this liability and related product licensing rights on the Condensed Consolidated Balance Sheet as of December 31, 2019 as recognition is contingent upon the future development of the product.
Acquisition-related Intangible Assets
During the quarter ended September 30, 2019, the Company determined there were indications of impairment on the ISM intangible assets primarily due to a significant decline in revenue. The decrease in revenue in the three months ended September 30, 2019, primarily was due to decreased sales of remote units driven by a slowdown in demand from two existing customers. The Company performed the recoverability test described above and concluded the carrying amount was recoverable. The Company concluded it was not necessary to perform a recoverability test during the quarter ended December 31, 2019.
The entire disclosure for all or part of the information related to intangible assets.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef