Acquisitions (See Note 5)

[Table of Contents](#i4552998170a04ab690e0e4bebd2d8dfd_7)  
FMC CORPORATIONNotes to Condensed Consolidated Financial Statements (unaudited) — (Continued)The balance of receivables from contracts with customers listed in the table above include both current trade receivables and long-term receivables, net of allowance for doubtful accounts. The allowance for receivables represents our best estimate of the probable losses associated with potential customer defaults. We determine the allowance based on historical experience, current collection trends, and external business factors such as economic factors, including regional bankruptcy rates, and political factors. The change in allowance for doubtful accounts for both current trade receivables and long-term receivables is representative of the impairment of receivables as of September 30, 2022. Refer to Note 6 for further information.The amount of revenue recognized in the nine months ended September 30, 2022 that was included in the opening contract liability balance is $627.4 million.We periodically enter into prepayment arrangements with customers and receive advance payments for product to be delivered in future periods. Prepayment terms are extended to customers/distributors in order to capitalize on surplus cash with growers. Growers receive bulk payments for their produce, which they leverage to buy our products from distributors through prepayment options. This in turn creates opportunity for distributors to make large prepayments to us for securing the future supply of products to be sold to growers. Prepayments are typically received in the fourth quarter of the fiscal year and are for the following marketing year indicating that the time difference between prepayment and performance of corresponding performance obligations does not exceed one year.We recognize these prepayments as a liability under "Advance payments from customers" on the condensed consolidated balance sheets when they are received. Revenue associated with advance payments is recognized as shipments are made and transfer of control to the customer takes place. Advance payments from customers were $630.7 million as of December 31, 2021 and $3.3 million as of September 30, 2022.Manufacturing and Seed Supply AgreementsAs part of the DuPont Crop Protection Business Acquisition in 2017, we acquired various manufacturing contracts. The manufacturing contracts have been recognized as an asset or liability to the extent the terms of the contract were favorable or unfavorable compared with market terms of the same or similar items at the date of the acquisition. We also entered into supply agreements with DuPont, with terms of up to five years, to supply technical insecticide products required for their retained seed treatment business at cost. The unfavorable liability is recorded within "Accrued and other liabilities" on the condensed consolidated balance sheets and is reduced and recognized to revenues within earnings as sales are made. The amount recognized in revenue for the nine months ended September 30, 2022 and 2021 was approximately $82 million and $77 million, and $28 million and $26 million for the three months ended September 30, 2022 and 2021, respectively.The manufacturing contracts and supply agreements discussed above ended on October 31, 2022 at the end of the five year term and as such, the unfavorable liability has been fully recognized and reduced to zero.   
Note 4: Goodwill and Intangible Assets The changes in the carrying amount of goodwill are presented in the table below:

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
| (in Millions) |  |  |  |  |  |  | Total |
| Balance, December 31, 2021 |  |  |  |  |  |  | $ | 1,463.3  |  |
| Acquisitions (See Note 5) |  |  |  |  |  |  | 130.7  |  |
|  |  |  |  |  |  |  |  |
| Foreign currency and other adjustments |  |  |  |  |  |  | (19.9) |  |
| Balance, September 30, 2022 |  |  |  |  |  |  | $ | 1,574.1  |  |

  
We perform our goodwill and indefinite-lived intangible asset impairment tests at least annually. Our fiscal year 2022 annual goodwill and indefinite-lived intangible asset impairment test was performed during the three months ended September 30, 2022. We determined no goodwill impairment existed and that the fair value was substantially in excess of the carrying value. Additionally, no indefinite-lived asset impairment existed and the estimated fair values also exceeded the carrying value for each of our indefinite-lived intangible assets.  
23
