Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill

Goodwill allocated to the Company's reportable segments as of April 30, 2017 and changes in the respective carrying amounts during the six months then ended were as follows:



	Enterprise Group			Software		Financial Services		Total
	In millions
Balance at October 31, 2016	$	15,945		$	8,089	$	144	$	24,178
Goodwill acquired during the period	1,323			—		—		1,323
Changes due to foreign currency	(1		)	—		—		(1		)
Goodwill adjustments	(2		)	—		—		(2		)
Balance at April 30, 2017	$	17,265		$	8,089	$	144	$	25,498

Goodwill is tested for impairment at the reporting unit level. As of April 30, 2017, the Company's reporting units are consistent with the reportable segments identified in Note 3, "Segment Information". The Company will continue to evaluate the recoverability of goodwill on an annual basis as of the beginning of its fourth fiscal quarter and whenever events or changes in circumstances indicate there may be a potential impairment.

Intangible Assets

The Company's intangible assets are composed of:



	As of April 30, 2017										As of October 31, 2016
	Gross		Accumulated Amortization			Accumulated Impairment Loss			Net		Gross		Accumulated Amortization			Accumulated Impairment Loss			Net
	In millions
Customer contracts, customer lists and distribution agreements	$	1,488	$	(305	)	$	(856	)	$	327	$	1,394	$	(322	)	$	(856	)	$	216
Developed and core technology and patents	4,565		(1,378		)	(2,138		)	1,049		4,190		(1,232		)	(2,138		)	820
Trade name and trademarks	215		(27		)	(109		)	79		178		(21		)	(109		)	48
In-process research and development	85		—			—			85		—		—			—			—
Total intangible assets	$	6,353	$	(1,710	)	$	(3,103	)	$	1,540	$	5,762	$	(1,575	)	$	(3,103	)	$	1,084

The increase in gross intangible assets during the first six months of fiscal 2017 was due to the addition of $579 million of intangible assets and $85 million of in-process research and development in connection with acquisitions completed during the period. This increase was partially offset by $73 million of intangible assets which became fully amortized and have been eliminated from gross intangible assets and accumulated amortization. Intangible asset amortization expense for the three months ended April 30, 2017 and 2016 was $107 million and $101 million, respectively, and for the six months ended April 30, 2017 and 2016 was $208 million and $220 million, respectively.

In-process research and development consists of efforts that are in process on the date the Company acquires a business. In-process research and development acquired in a business combination is considered an indefinite-lived intangible asset until completion or abandonment of the associated research and development efforts. The Company begins amortizing its in-process research and development intangible assets upon completion of the projects. If an in-process research and development project is abandoned, the Company records an expense for the value of the related intangible asset to its Condensed Consolidated Statement of Earnings in the period of abandonment. No in-process research and development projects were completed or abandoned during the six months ended April 30, 2017.

As of April 30, 2017, estimated future amortization expense related to finite-lived intangible assets was as follows:



Fiscal year:	In millions
2017 (remaining 6 months)	$	243
2018	383
2019	306
2020	248
2021	106
2022	78
Thereafter	91
Total	$	1,455

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details