2019 BBNC Annual Report | Page 51

(G) NOTES RECEIVABLE Notes receivable are recorded at the original principal amount plus interest accrued, less payments made to date. Interest is compounded based on the terms of the individual loan agreement, and may not be accrued in the case of probable uncollectible amounts. The notes receivable at March 31, 2018 is a promissory note from a company which bears interest at 16% per annum with principal and unpaid interest due June 30, 2018. Allowance for notes receivable losses are maintained at levels deemed adequate by management to provide for probable and inherent losses and provisions for notes receivable losses are added to, and charge-offs deducted, from, the respective allowance for notes receivable losses. At March 31, 2019, and 2018, there were no allowances for notes receivable losses. Notes receivable are considered impaired when, based on current information and events, it is probable that the Corporation will be unable to collect scheduled payments of principal and interest when due according to the con- tractual terms of the note agreements. Impairment is measured by comparing the estimated fair value, less selling costs (net realizable value) of the underlying collateral against the recorded investment of the loan. Notes receivable are charged-off when all possible means of collection have been exhausted and the remaining balance due is deemed uncollectable. For the years ended March 31, 2019, 2018, and 2017, there were no impairment charges. (H) INVENTORIES Inventories, which consist primarily of petroleum products, are stated at the lower of cost (principally, first-in, first-out) or net realizable value. (I) PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment are recorded at cost. Depreciation of property, plant, and equipment is provided based on the estimated useful lives of the respective assets using the straight-line method. Estimated lives for buildings are 10 to 40 years, and for machinery and equipment, 3 to 10 years. Leasehold improvements are amortized straight-line over the shorter of the lease term or estimated useful life of the asset. The cost of current repairs and maintenance is charged to expense, while the cost of betterment is capitalized. (J) GOODWILL AND INTANGIBLES Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is reviewed for impairment at least annually. The Corporation has an option to assess qualitative factors 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 after assessing the totality of events or circumstances, the Corporation determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step goodwill impairment test is unnecessary. However, if the Corporation concludes otherwise, the Corporation is required to perform the first step of the two-step impairment test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit’s goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed. The Corporation performs its annual impairment review of goodwill at March 31, and when a triggering event occurs between annual impairment tests. No impairment loss was recorded in 2019, 2018 or 2017. The reporting units assessed for impairment include Industrial Services Group (ISG) , SpecPro Technical Services (STS) group, and SpecPro Environmental Services (SES) group. M anagement ' s D iscussion and A nalysis 49