GOODWILL

Many of the former owners and staff of acquired funeral homes and certain cemeteries have provided high quality service to families for generations. The resulting loyalty often represents a substantial portion of the value of a business. The excess of the purchase price over the fair value of net identifiable assets acquired and liabilities assumed, as determined by management in business acquisition transactions accounted for as purchases, is recorded as goodwill.

We performed our 2014 annual impairment test of goodwill using information as of August 31, 2014. Under current guidance, we are permitted to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. For our 2014 impairment test we conducted a qualitative assessment. For our 2013 annual impairment test, we performed the two-step goodwill impairment test. Our intent is to perform the two-step test at least once every three years unless certain indicators or events suggest otherwise. Also see Note 1 to the Consolidated Financial Statements herein for a discussion of the methodology used for our annual goodwill impairment test. Based on our 2014 impairment test, we concluded that there was no impairment to goodwill.

The following table presents changes in goodwill in the accompanying Consolidated Balance Sheets for the years ended December 31, 2013 and 2014 (in thousands):



	December 31, 2013			December 31, 2014
Goodwill at the beginning of year	$	218,442		$	221,087
Increase in goodwill related to acquisitions	3,843			37,653
Changes in previous estimates	—			(101		)
Net impairment and write-off related to divestitures	(1,198		)	(1,197		)
Goodwill at the end of the year	$	221,087		$	257,442

The $37.7 million increase to goodwill related to acquisitions represents the goodwill recorded in connection with the SCI Acquisition completed in May 2014. The changes in previous estimates relate to a $0.1 million reduction in goodwill relating to adjustments in inventory for the November 2013 funeral home business acquisition. In the second quarter of 2014, we recorded an impairment of $1.2 million related to a business held for sale as the carrying value exceeded fair value. As such, this amount is recorded within discontinued operations on our Consolidated Statements of Operations. Our purchase price allocations for these acquisitions have been completed as of December 31, 2014.