Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table shows the carrying amount of goodwill by reportable segment as of December 31, 2021 and 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	(9)		—		—		(241)		(35)		(285)
Effect of exchange rate changes	1		—		—		—		1		2
Balance as of December 31, 2021	$	579	$	828	$	576	$	69	$	39	$	2,091

Goodwill is not amortized, but is reviewed for impairment annually in the fourth quarter or more frequently whenever events or circumstances indicate that the carrying value may not be recoverable. 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, 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 6—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, limited to the total amount of goodwill allocated to the reporting unit.

In the fourth quarter of 2021, the continued impacts of the U.K. energy crisis triggered an additional impairment test of goodwill, which resulted in an additional goodwill impairment charge of $26 million. As a result, we have no remaining goodwill related to our U.K. operations on our consolidated balance sheet as of December 31, 2021. See Note 6—United Kingdom Energy Crisis and Impairment Charges for additional information.

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:


	December 31, 2021						December 31, 2020
	Gross Carrying Amount(1)		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
	(in millions)

Customer relationships	$	84	$	(60)	$	24	$	133	$	(52)	$	81

Trade names	31		(10)		21		32		(9)		23

Total intangible assets	$	115	$	(70)	$	45	$	165	$	(61)	$	104

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(1)As of December 31, 2021, the gross carrying amount for customer relationships and trade names include impairment charges in 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. During the fourth quarter of 2021, as we had estimated that we had sufficient emission credits for our 2021 obligations, we sold excess U.K. emission credits, including those purchased in the third quarter of 2021, for approximately $46 million and recognized a corresponding gain of $27 million, which is included in other operating—net in our consolidated statement of operations. Amortization expense of our identifiable intangible assets for each of the years ended December 31, 2021, 2020 and 2019 was $8 million. 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 each of the fiscal years 2022-2026 is $4 million.

In the third quarter of 2021, 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 6—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. As a result, long-lived asset impairment charges, inclusive of the definite-lived intangible assets, of $236 million were recorded. The amount of the impairment that was allocated to definite-lived intangible assets was $50 million.

In the fourth quarter of 2021, natural gas prices in the United Kingdom continued to rise, which triggered an additional impairment test of the long-lived assets in our U.K. asset groups. This test indicated that no additional long-lived asset impairment should be recorded as the undiscounted cash flows were in excess of the carrying values for each of the U.K. asset groups. See Note 6—United Kingdom Energy Crisis and Impairment Charges and Note 7—Property, Plant and Equipment—Net for additional information.

Long-lived assets on our consolidated balance sheet as of December 31, 2021 include approximately $425 million related to the U.K. asset groups, including approximately $30 million of customer relationships and trade names.