Increase in other long-term liabilities

CAESARS ENTERTAINMENT, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)identifiable assets and liabilities of Horseshoe Baltimore, with any potential excess recorded as goodwill as of December 31, 2021:

|  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |
| (In millions) | Fair Value |
| Current assets | $ | 60  |  |
| Property and equipment, net | 317  |  |
| Goodwill | 63  |  |
| Intangible assets (a) | 53  |  |
| Other noncurrent assets | 183  |  |
| Total assets | $ | 676  |  |
|  |  |
| Current liabilities | $ | 26  |  |
| Long-term debt | 272  |  |
| Other long-term liabilities | 182  |  |
| Total liabilities | 480  |  |
| Noncontrolling interests | 42  |  |
| Net assets acquired | $ | 154  |  |

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(a)Intangible assets consist of gaming rights valued at $43 million and customer relationships valued at $10 million.As noted above, the preliminary purchase price allocation is subject to a measurement period and our estimates as of September 30, 2021 have been revised. The net impact of these changes in our preliminary valuations was a $102 million increase to property and equipment, net, a $63 million increase to goodwill, a $188 million decrease to intangible assets, a $47 million increase to other noncurrent assets, and a $24 million increase in other long-term liabilities. The effect of these revisions during the quarter did not have a material impact on our Statements of Operations.The fair values of the assets acquired and liabilities assumed were determined using the market, income, and cost approaches, or a combination. Valuation methodologies under both a market and income approach used for the identifiable net assets acquired in the Horseshoe Baltimore acquisition make use of Level 3 inputs, such as expected cash flows and projected financial results. The market approach indicates value for a subject asset based on available market pricing for comparable assets.Trade receivables and payables and other current and noncurrent assets and liabilities were valued at the existing carrying values as they represented the estimated fair value of those items at the Horseshoe Baltimore acquisition date.Other personal property assets such as furniture, equipment, computer hardware, and fixtures were valued at the existing carrying values as they closely represented the estimated fair value of those items at the Horseshoe Baltimore acquisition date. The fair value of the buildings and improvements were estimated via the income approach. The remaining estimated useful life of the buildings and improvements is 40 years. The right of use asset and operating lease liability related to a ground lease for the site on which Horseshoe Baltimore is located was recorded at fair value and will be amortized over the estimated remaining useful life due to changes in the underlying fair value and estimated remaining useful life of the building and improvements. Renewal options are considered to be reasonably certain. The income approach was used to determine fair value, based on the estimated present value of the future lease payments over the lease term, including renewal options, using an incremental borrowing rate of approximately 7.6%.Customer relationships are valued using an income approach, comparing the prospective cash flows with and without the customer relationships in place to estimate the fair value of the customer relationships, with the fair value assumed to be equal to the discounted cash flows of the business that would be lost if the customer relationships were not in place and needed to be replaced. We estimate the useful life of these customer relationships to be approximately seven years.The fair value of the gaming rights was determined using the excess earnings method, which is an income approach methodology that estimates the projected cash flows of the business attributable to the gaming license intangible asset, which is net of charges for the use of other identifiable assets of the business including working capital, fixed assets and other intangible assets. The acquired gaming rights are considered to have an indefinite life.The goodwill acquired will generate amortization deductions for income tax purposes.The fair value of long-term debt has been calculated based on market quotes.[Table of Contents](#i37dfc5eabc12461dbfc5ef573d80947e_7)77
