Table:
| (in million) | January 31, 2019 | January 31, 2018 |
| --- | --- | --- |
| Goodwill, beginning of the year | $1,769.4 | $1,710.3 |
| Less: accumulated impairment losses, beginning of the year | (149.2) | (149.2) |
| Additions arising from acquisitions during the year | 866.9 | — |
| Effect of foreign currency translation, measurement period adjustments, and other (1) | (36.3) | 59.1 |
| Goodwill, end of the year | $2,450.8 | $1,620.2 |
Paragraphs:
Goodwill
Goodwill consists of the excess of the consideration transferred over the fair value of net assets acquired in business combinations. Autodesk tests goodwill for impairment annually in its fourth fiscal quarter or more often if circumstances indicate a potential impairment may exist, or if events have affected the composition of reporting units.
When goodwill is assessed for impairment, Autodesk has the option to perform an assessment of qualitative factors of impairment (“optional assessment”) prior to necessitating a quantitative impairment test. Should the optional assessment be used for any given fiscal year, qualitative factors to consider include cost factors; financial performance; legal, regulatory, contractual, political, business, or other factors; entity specific factors; industry and market considerations, macroeconomic conditions, and other relevant events and factors affecting the reporting unit. If, after assessing the totality of events or circumstances, it is more likely than not that the fair value of the reporting unit is greater than its carrying value, then performing the quantitative impairment test is unnecessary.
The quantitative impairment test is necessary when either Autodesk does not use the optional assessment or, as a result of the optional assessment, it is not more likely than not that the fair value of the reporting unit is greater than its carrying value. In situations in which an entity's reporting unit is publicly traded, the fair value of the Company may be approximated by its market capitalization, in performing the quantitative impairment test.
Goodwill impairment exists when the estimated fair value of goodwill is less than its carrying value. If impairment exists, the carrying value of the goodwill is reduced to fair value through an impairment charge recorded in the Company's statements of operations. The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis. The value of Autodesk’s goodwill could also be impacted by future adverse changes such as: (i) declines in Autodesk’s actual financial results, (ii) a sustained decline in Autodesk’s market capitalization, (iii) a significant slowdown in the worldwide economy or the industries Autodesk serves, or (iv) changes in Autodesk’s business strategy.
For the annual impairment test, Autodesk's market capitalization was substantially in excess of the carrying value of the Company as of January 31, 2019. Accordingly, Autodesk has determined there was no goodwill impairment during the fiscal year ended January 31, 2019. In addition, Autodesk did not recognize any goodwill impairment losses in fiscal 2018 or 2017.
The following table summarizes the changes in the carrying amount of goodwill during the fiscal years ended January 31, 2019 and 2018:
(1) Purchase accounting adjustments reflect revisions made to the Company’s preliminary determination of estimated fair value of assets and liabilities assumed during fiscal 2019 and 2018.
Question:
When is the quantitative impairment test necessary?
Answer: when either Autodesk does not use the optional assessment or, as a result of the optional assessment, it is not more likely than not that the fair value of the reporting unit is greater than its carrying value.