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Anthropic, PBC
Notes to Consolidated Financial Statements
(Continued)

Evaluation of Long-Lived Assets for Impairment

Long-lived  assets,  such  as  property  and  equipment,  right-of-use  (“ROU”)  assets,  and  finite-lived  intangible 
assets  subject  to  amortization,  are  reviewed  for  impairment  whenever  events  or  changes  in  circumstances 
indicate  that  the  carrying  amount  of  an  asset  or  asset  group  (collectively,  the  “asset  group”)  may  not  be 
recoverable. Recoverability of asset groups to be held and used is measured by comparing the carrying amount 
to the estimated undiscounted future cash flows expected to be generated. If the carrying amount exceeds the 
undiscounted  cash  flows,  the  asset  groups  are  determined  to  be  impaired,  and  an  impairment  charge  is 
recognized as the amount by which the carrying amount exceeds its fair value. 

Intangible Assets, Net

Intangible assets which are subject to amortization are amortized on a straight-line basis over their estimated 
useful  lives,  which  range  from one  to six  years.  The  Company  reviews  intangible  assets  which  are  subject  to 
amortization for impairment under the long-lived asset model.

Goodwill

Goodwill  represents  the  excess  of  the  purchase  price  in  a  business  combination  over  the  fair  value  of  net 
tangible and intangible assets acquired. Goodwill is not subject to amortization but is tested for impairment on 
an annual basis, performed in the fourth quarter of each year, or whenever events or changes in circumstances 
indicate the carrying value of the reporting unit may be in excess of the reporting unit’s fair value. 

Goodwill  is  tested  for  impairment  at  the  reporting  unit  level  by  first  assessing  the  qualitative  factors  to 
determine whether it is more likely than not that the fair value of the Company’s single reporting unit is less 
than  its  carrying  amount.  Qualitative  indicators  assessed  include  consideration  of  macroeconomic,  industry, 
and market conditions, the Company’s overall financial performance, and personnel or strategy changes. Based 
on  the  qualitative  assessment,  if  the  Company  determines  that  it  is  more  likely  than  not  that  the  Company’s 
single  reporting  unit’s  fair  value  is  less  than  its  carrying  amount,  a  quantitative  analysis  is  performed  by 
comparing the fair value of the Company’s single reporting unit to its carrying value. If the carrying amount of 
the  reporting  unit  exceeds  its  fair  value,  an  impairment  loss  is  recognized  in  an  amount  equal  to  that  excess, 
limited  to  the  total  amount  of  goodwill  allocated  to  the  reporting  unit.  The  Company  did  not  recognize  any 
goodwill during the years ended December 31, 2023  and 2024. No impairment losses related to goodwill were 
recognized during the year ended December 31, 2025 or the six months ended June 30, 2026 (unaudited).

Acquisitions

The Company accounts for acquisitions of entities or asset groups that qualify as businesses in accordance with 
ASC 805, Business Combinations (“ASC 805”). The purchase price of the acquisition is allocated to the tangible 
and  intangible  assets  acquired  and  liabilities  assumed  based  on  their  estimated  fair  values  at  the  acquisition 
date. The excess of the purchase price over those fair values is recorded as goodwill. During the measurement 
period,  which  may  be  up  to  one  year  from  the  acquisition  date,  the  Company  may  record  adjustments  to  the 
assets  acquired  and  liabilities  assumed  with  the  corresponding  offset  to  goodwill.  Upon  the  conclusion  of  the 
measurement  period  or  final  determination  of  the  values  of  assets  acquired  or  liabilities  assumed,  whichever 
comes first, any subsequent adjustments are recorded in the consolidated statements of operations.

Leases 

The Company determines if an arrangement is a lease at inception. The Company evaluates the classification of 
leases at commencement and, as necessary, at modification. The Company, as the lessee, classifies leases with 
lease  terms  longer  than 12  months  as  either  operating  or  finance.  A  lease  is classified  as  a  finance  lease  if  it 
meets  any  of the  finance  lease  classification  criteria  in  ASC  842  at  lease  commencement;  all  other  leases  are 
classified as operating leases. The Company’s finance leases are generally those leases that allow the Company 
to utilize the asset for a major part of its estimated economic life, that have discounted lease payments that are 
substantially all the estimated fair value of the asset, or that include a purchase option which the Company is 
reasonably certain to exercise.

The  Company  leases  facilities  and  equipment  under  operating  and  finance  leases.  The  Company  determines 
whether an arrangement is or contains a lease at inception and records lease liabilities and right-of-use assets 

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