Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table shows the carrying amount of goodwill by reportable segment as of September 30, 2021 and December 31, 2020:


	Ammonia		Granular Urea		UAN		AN		Other		Total
	(in millions)
Balance as of December 31, 2020	$	587	$	828	$	576	$	310	$	73	$	2,374
Impairment losses	(4)		—		—		(233)		(22)		(259)
Effect of exchange rate changes	—		—		—		—		1		1
Balance as of September 30, 2021	$	583	$	828	$	576	$	77	$	52	$	2,116

Goodwill is not amortized, but is reviewed for impairment annually in the fourth quarter and when circumstances or other events indicate that impairment may have occurred. During the third quarter of 2021, in light of the unprecedented increase in natural gas prices in the United Kingdom and its estimated impact on our U.K. operations, we identified a triggering event indicating possible impairment of goodwill within our U.K. ammonia, U.K. AN and U.K. Other reporting units.

Due to the triggering event identified above, we performed an interim quantitative goodwill impairment analysis as of September 30, 2021 for our U.K. ammonia, U.K. AN and U.K. Other reporting units. We estimated the fair value of the reporting units using the income approach described in Note 3—United Kingdom Energy Crisis and Impairment Charges. Based on the evaluation performed, we determined that the carrying value of all three reporting units exceeded their fair value, which resulted in a goodwill impairment charge totaling $259 million in the third quarter of 2021. The goodwill impairment was calculated as the amount that the carrying value of the reporting unit, including any goodwill, exceeded its fair value.

As a result of the goodwill impairment charge, goodwill on our consolidated balance sheet as of September 30, 2021 includes $5 million related to the U.K. ammonia reporting unit, $8 million related to the U.K. AN reporting unit and $13 million related to the U.K. Other reporting unit, which are included in the ammonia, AN and Other reportable segments, respectively. As a result of the goodwill impairment, all three U.K. reporting units were written down to their respective fair values resulting in zero excess fair value over carrying amount as of the September 30, 2021 impairment test date.

Other Intangible Assets

All of our identifiable intangible assets have definite lives and are presented in other assets on our consolidated balance sheets at gross carrying amount, net of accumulated amortization, as follows:


	September 30, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
	(in millions)

Customer relationships	$	84	$	(58)	$	26	$	133	$	(52)	$	81
Trade names	31		(10)		21		32		(9)		23
U.K. carbon credits	19		—		19		—		—		—
Total intangible assets	$	134	$	(68)	$	66	$	165	$	(61)	$	104

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(1)As of September 30, 2021, the gross carrying amount for customer relationships and trade names include impairment charges recorded in the three months ended September 30, 2021 of $49 million and $1 million, respectively.

Our customer relationships and trade names are being amortized over a weighted-average life of approximately 20 years. The U.K. carbon credits are being amortized based on units of production. Amortization expense of our identifiable intangible assets was $2 million and $6 million for the three and nine months ended September 30, 2021, respectively, and $2 million and $6 million for the three and nine months ended September 30, 2020, respectively. The gross carrying amount and accumulated amortization of our intangible assets are also impacted by the effect of exchange rate changes. Total estimated amortization expense for the remainder of 2021 and each of the five succeeding fiscal years is as follows:


	Estimated Amortization Expense
	(in millions)
Remainder of 2021	$	1
2022	7
2023	15
2024	9
2025	4
2026	4

As a result of the triggering event described above, we also performed a recoverability test on our long-lived assets within the U.K. ammonia, U.K. AN and U.K. Other asset groups, including our definite-lived intangible assets, as of September 30, 2021. The recoverability test was based on forecasts of undiscounted cash flows, as described in Note 3—United Kingdom Energy Crisis and Impairment Charges. The results of the recoverability test indicated that the long-lived assets within our U.K. ammonia, U.K. AN and U.K. Other asset groups were not fully recoverable, and, as a result, long-lived asset impairment charges, inclusive of the definite-lived intangible assets, of $236 million were recorded, representing the excess of the carrying value of the asset groups over its fair value. That impairment was allocated to each of the underlying assets reducing them to their fair value, of which $50 million was allocated to definite-lived intangible assets. See Note 3—United Kingdom Energy Crisis and Impairment Charges and Note 6—Property, Plant and Equipment—Net for additional information. As a result of the long-lived asset impairment charges, long-lived assets on our consolidated balance sheet as of September 30, 2021 include $450 million related to the U.K. asset groups, including approximately $30 million of customer relationships and trade names.