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Goodwill and Other Intangible Assets | 12 Months Ended
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Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill consisted of the following (in millions):
| Marketplace |  | Finance |  | Total
Balance at December 31, 2021 (1)(2) | $ | 1,357.1 |  |  | $ | 240.9 |  |  | $ | 1,598.0 |
Decrease for disposition activity | (119.2) |  |  | — |  |  | (119.2) |
Foreign currency | (14.3) |  |  | — |  |  | (14.3) |
Balance at December 31, 2022 (1)(2) | $ | 1,223.6 |  |  | $ | 240.9 |  |  | $ | 1,464.5 |
Increase for acquisition activity | 25.9 |  |  | — |  |  | 25.9 |
Impairment | (225.3) |  |  | — |  |  | (225.3) |
Foreign currency | 6.1 |  |  | — |  |  | 6.1 |
Balance at December 31, 2023 (1)(2) | $ | 1,030.3 |  |  | $ | 240.9 |  |  | $ | 1,271.2 |
(1) Marketplace amounts are net of accumulated goodwill impairment charges of $250.8 million, $25.5 million and $25.5 million at December 31, 2023, 2022 and 2021, respectively. (2) Finance amounts are net of accumulated goodwill impairment charges of $161.5 million at December 31, 2023, 2022 and 2021. Goodwill represents the excess cost over fair value of identifiable net assets of businesses acquired. Goodwill decreased in 2023 primarily as a result of impairment in a few of our reporting units (see discussion below), partially offset by goodwill recognized for acquisition activity. Goodwill decreased in 2022 primarily as a result of the sale of the ADESA U.S. physical auction business, as well as foreign currency changes. As a result of the sale of the ADESA U.S. physical auction business in 2022, we allocated approximately $1.1 billion of goodwill related to the ADESA Auctions operating segment to the disposal group in connection with the disposition of ADESA U.S. The goodwill was initially allocated to the disposal group at the held-for-sale date, and updated at the sale date, based on the relative fair value of ADESA U.S. compared to the fair value of the remainder of the operating segment at both dates, respectively. The Company tests goodwill for impairment at the reporting unit level annually during the second quarter, or more frequently if events or changes in circumstances indicate that impairment may exist. When performing the impairment assessment, the fair value of the Company's reporting units are estimated using the expected present value of future cash flows (Level 3 inputs). As part of this annual process, in the second quarter of 2023 the Company updated its forecasts for all of its reporting units, including an updated estimate for near-term and long-term revenue growth rates reflecting a slower overall recovery in vehicle volumes. Discount rates and other cash flow assumptions used in the valuations were also adjusted. As a result of this impairment assessment, it was determined that the fair value was lower than the carrying value for our U.S. Dealer-to-Dealer and Europe reporting units (both within the Marketplace segment). Accordingly, the Company recorded non-cash goodwill impairment charges totaling $218.9 million related to our U.S. Dealer-to-Dealer reporting unit and $6.4 million related to our Europe reporting unit. The goodwill impairment charge related to our U.S. Dealer-to-Dealer reporting unit relates to tax deductible goodwill, and as such the impairment resulted in a deferred tax benefit of $52.5 million. The goodwill impairment related to our U.S. Dealer-to-Dealer reporting unit was primarily driven by lower near-term and long-term revenue growth associated with a slower overall recovery in vehicle volumes. The goodwill impairment related to our Europe reporting unit was driven by combining two previously separate reporting units (ADESA U.K. and ADESA Europe) into a single reporting unit. Including ADESA U.K. in the reporting unit resulted in a reduction in the overall fair value of the combined reporting unit, resulting in an impairment charge. Goodwill impairment was not identified in any other reporting unit in the second quarter of 2023. The impairment charges were reported as a component of "Goodwill and other intangibles impairment" in the consolidated statements of income. As a result of the second quarter 2023 impairment charges, the carrying value of the U.S. Dealer-to-Dealer and Europe reporting units now approximate fair value. As of December 31, 2023, the remaining carrying value of goodwill related to the U.S. Dealer-to-Dealer and Europe reporting units was $87.3 million and $120.8 million, respectively. The deferred tax benefits of $52.5 million and $6.5 million associated with the goodwill and tradename impairments, respectively, resulted in the U.S. being in a net deferred tax asset position. Due to the three-year cumulative loss related to U.S. operations, we recorded a $36.4 million valuation allowance against the U.S. net deferred tax asset at December 31, 2023. No impairment was identified 2022. Following the sale of ADESA U.S., the Company made certain changes to its reporting structure within the Marketplace segment and realigned its reporting units as of November 30, 2022. This change required goodwill in the Marketplace segment to be allocated to the new reporting units based on their relative fair value. The Company tested goodwill of the new reporting units for impairment both before and following the change in reporting unit structure as of November 30, 2022, by comparing the fair values of the reporting units to their carrying values and no impairment was identified. A summary of customer relationships is as follows (in millions):
|  |  | December 31, 2023 |  | December 31, 2022
| Useful Lives (in years) |  | Gross Carrying Amount |  | Accumulated Amortization |  | Carrying Value |  | Gross Carrying Amount |  | Accumulated Amortization |  | Carrying Value
Customer relationships | 5 - 19 |  | $ | 574.6 |  |  | $ | (438.5) |  |  | $ | 136.1 |  |  | $ | 553.2 |  |  | $ | (417.3) |  |  | $ | 135.9 |
The increase in customer relationships in 2023 was primarily related to the Manheim Canada acquisition, partially offset by the amortization of existing customer relationships. The decrease in customer relationships in 2022 was primarily related to the amortization of existing customer relationships. A summary of other intangibles is as follows (in millions):
|  |  | December 31, 2023 |  | December 31, 2022
| Useful Lives (in years) |  | Gross Carrying Amount |  | Accumulated Amortization |  | Carrying Value |  | Gross Carrying Amount |  | Accumulated Amortization |  | Carrying Value
Tradenames | 1 - Indefinite |  | $ | 123.2 |  |  | $ | (27.9) |  |  | $ | 95.3 |  |  | $ | 148.6 |  |  | $ | (15.2) |  |  | $ | 133.4 |
Computer software & technology | 3 - 13 |  | 533.7 |  |  | (447.5) |  |  | 86.2 |  |  | 488.7 |  |  | (390.8) |  |  | 97.9 |
Total |  |  | $ | 656.9 |  |  | $ | (475.4) |  |  | $ | 181.5 |  |  | $ | 637.3 |  |  | $ | (406.0) |  |  | $ | 231.3 |
Other intangibles decreased in 2023 and 2022 primarily as a result of the amortization of existing intangibles, partially offset by computer software additions. The 2023 balance was also impacted by the ADESA tradename impairment and subsequent amortization taken (see discussion below). The carrying amount of tradenames with an indefinite life was approximately $8.7 million and $131.5 million at December 31, 2023 and 2022, respectively. The second quarter 2023 announcement of the rebrand to an OPENLANE branded marketplace from the ADESA branded marketplaces served as a triggering event requiring a re-evaluation of the useful life and impairment of the ADESA tradename. As such, the Company evaluated the $122.8 million carrying amount of its indefinite-lived ADESA tradename, resulting in a non-cash impairment charge totaling $25.5 million in the second quarter of 2023 and associated deferred tax benefit of $6.5 million (within the Marketplace segment). The impairment charge was reported as a component of "Goodwill and other intangibles impairment" in the consolidated statements of income. The ADESA tradename is expected to continue to generate cash flows pursuant to the purchase and commercial agreements with Carvana and its affiliates for a defined period. The fair value of the ADESA tradename was estimated using the royalty savings method (Level 3 inputs). Furthermore, as a result of the rebrand to OPENLANE, the ADESA tradename is no longer deemed to have an indefinite life and its remaining carrying amount of $97.3 million is being amortized over a remaining useful life of approximately 6 years. Amortization expense for customer relationships and other intangibles was $87.7 million, $83.6 million and $89.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. Estimated amortization expense on existing intangible assets for the next five years is $70.4 million for 2024, $54.1 million for 2025, $38.2 million for 2026, $31.7 million for 2027 and $31.6 million for 2028.

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