Note 6—Goodwill

The changes in the carrying amount of goodwill by reporting unit for the years ended December 31, 2016 and 2017 are as follows (in thousands):

	U.S. and Canada			International			Halloween			Total
Balance, January 1, 2016:
Goodwill	$	30,218		$	11,717		$	2,264		$	44,199
Adjustments to goodwill for foreign currency translation		(678	)		(262	)		(51	)		(991	)
Balance December 31, 2016:		29,540			11,455			2,213			43,208
Adjustments to goodwill for foreign currency translation		317			125			22			464
Impairment		(6,053	)		—			(2,235	)		(8,288	)
Balance December 31, 2017:	$	23,804		$	11,580		$	—		$	35,384

The Company assesses goodwill and indefinite-lived intangible assets for impairment on an annual basis by reviewing relevant qualitative and quantitative factors. More frequent evaluations may be required if the Company experiences changes in its business climate or as a result of other triggering events that take place. If carrying value exceeds fair value, a possible impairment exists and further evaluation is performed.

The Company performed its annual assessment for impairment on goodwill as of our annual testing date being April 1, 2017. In performing its assessment for goodwill impairment, the Company prepared a Step 1 quantitative test and determined there was no impairment to goodwill as of April 1, 2017. The valuation of goodwill involves a high degree of judgment and uncertainty related to key assumptions. Due to the subjective nature of the impairment analysis, significant changes in the assumptions used to develop the estimate could materially affect the conclusion regarding the future cash flows necessary to support the valuation of goodwill.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment”, which removes Step 2 from the goodwill impairment test. ASU 2017-04 requires that if a reporting unit’s carrying value exceeds its fair value, an impairment charge would be recognized for the excess amount, not to exceed the carrying amount of goodwill. ASU 2017-04 will be effective for interim and annual reporting periods beginning after December 15, 2019. Early application is permitted after January 1, 2017. The Company early adopted ASU 2017-04 in the third quarter of 2017.

The Company applies a fair value-based impairment test to the carrying value of goodwill and indefinite-lived intangible assets on an annual basis, and on an interim basis, if certain events or circumstances indicate that an impairment loss may have been incurred. Goodwill impairment exists when the estimated fair value of goodwill is less than its carrying value. Based on several factors that have occurred since the Company’s April 1, 2017 assessment, the Company determined that the fair values of its reporting units should be retested for potential impairment. Based on the retesting performed with the assistance of a third-party valuation consultant as of September 30, 2017, it was determined that the fair values of two of its three reporting units were less than their respective carrying amounts. Accordingly, a charge of $8.3 million for goodwill impairment was recorded during the third quarter of the year ending December 31, 2017. No impairment was recorded during the year ended December 31, 2016.