Intangible assets



(In $ million)	Goodwill		Trademarks		Customer relationships		Technology & software		Other		Total
As of December 31, 2019
Cost	5,097		1,732		3,101		888		102		10,920
Accumulated amortization	—		(66	)	(1,391	)	(634	)	(28	)	(2,119	)
Accumulated impairment losses	(232	)	—		(3	)	—		(5	)	(240	)
Carrying amount as of December 31, 2019	4,865		1,666		1,707		254		69		8,561
As of December 31, 2018
Cost	5,456		1,764		3,299		891		103		11,513
Accumulated amortization	—		(87	)	(1,344	)	(622	)	(27	)	(2,080	)
Accumulated impairment losses	(206	)	—		—		—		(5	)	(211	)
Carrying amount as of December 31, 2018	5,250		1,677		1,955		269		71		9,222
Carrying amount as of January 1, 2019	5,250		1,677		1,955		269		71		9,222
Additions	—		—		—		55		3		58
Amortization for the year	—		(4	)	(161	)	(60	)	(3	)	(228	)
Impairment losses	(59	)	—		(3	)	—		—		(62	)
Transfers to assets held for sale	(324	)	(7	)	(85	)	(9	)	(1	)	(426	)
Other transfers	—		—		—		(1	)	(1	)	(2	)
Effect of movements in exchange rates	(2	)	—		1		—		—		(1	)
Carrying amount as of December 31, 2019	4,865		1,666		1,707		254		69		8,561
Carrying amount as of January 1, 2018	5,465		1,680		2,132		310		72		9,659
Additions	—		—		—		20		2		22
Disposals	(3	)	—		(3	)	—		—		(6	)
Amortization for the year	—		(3	)	(166	)	(61	)	(3	)	(233	)
Impairment losses	(206	)	—		—		—		—		(206	)
Effect of movements in exchange rates	(6	)	—		(8	)	—		—		(14	)
Carrying amount as of December 31, 2018	5,250		1,677		1,955		269		71		9,222

During the year ended December 31, 2019, goodwill disposals were related to certain businesses of the former Closures segment. During the year ended December 31, 2018, goodwill disposals were related to certain Graham Packaging businesses.

Amortization expense related to intangible assets is recognized in the following components in the statements of comprehensive income:



	For the year ended December 31,
(In $ million)	2019	2018	2017
Cost of sales	41	42	42
General and administration expenses	175	176	196
Discontinued operations	12	15	17
Total amortization expense	228	233	255

Refer to note 16 for details of security granted over the Group's intangible assets.

14.1 Impairment testing for indefinite life intangible assets

Goodwill, certain trademarks and certain other intangible assets are the only intangibles with indefinite useful lives and therefore are not subject to amortization. Instead, they are tested for impairment at least annually (as of December 31) as well as whenever there is an indication that they may be impaired. Goodwill is tested at the segment level, which is the lowest level within the Group at which goodwill is monitored for internal management purposes. Indefinite life intangible assets are tested at a CGU or group of CGUs that supports the indefinite life intangible assets.

The aggregate carrying amounts of goodwill and indefinite life intangible assets allocated to each segment for purposes of impairment testing are as follows:



	As of December 31,
	2019			2018
(In $ million)	Goodwill	Trademarks	Other	Goodwill	Trademarks	Other
Reynolds Consumer Products	1,913	850	—	1,913	850	—
Pactiv Foodservice	1,686	526	59	1,696	526	59
Graham Packaging	1,200	251	—	1,200	251	—
Evergreen	66	34	—	67	34	—
Other/Unallocated⁽¹⁾	—	—	—	374	—	—
Total	4,865	1,661	59	5,250	1,661	59

(1) Other/Unallocated includes the goodwill associated with the former Closures segment.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to dispose.

For goodwill and certain indefinite lived trademarks the estimated fair value has been determined at the segment level using the 2019 Adjusted EBITDA or forecasted 2020 Adjusted EBITDA expected to be generated multiplied by an earnings multiple. The key assumptions in developing the forecasted Adjusted EBITDA include management's assessment of future trends in the segment's industry and are based on both external and internal sources. The forecasted 2020 Adjusted EBITDA has been prepared using certain key assumptions including selling prices, sales volumes and costs of raw materials. Earnings multiples reflect recent sale and purchase transactions and comparable company EBITDA trading multiples in the same industry. The earnings multiples applied for December 31, 2019 ranged between 7.5x and 10x. Costs to dispose were estimated to be 1% to 2% of the fair value of each segment depending on the magnitude of the fair value.

Historically, the Group has evaluated the recoverability of the goodwill associated with the former Closures segment at the segment level. This represented the lowest level at which goodwill was monitored for recoverability and also reflected the synergies associated with the global operations of the former Closures segment. In connection with the sale of the closures operations in North America and Japan, the Group has separately evaluated the recoverability of this disposal group with reference to the sales price, less costs to sell. This evaluation resulted in the recognition of an impairment charge of $33 million, which has been recognized as a reduction to the carrying value of goodwill within discontinued operations.

The closure operations in North America and Japan represent substantially all of the former Closures segment. Accordingly, the separation of these operations from the remaining closures businesses is expected to result in various commercial dis-synergies. This separation and the impairment arising on the operations sold triggered a review of the recoverability of the remaining closures operations during the year ended December 31, 2019. Estimated recoverable amounts were determined using a fair value less costs of disposal methodology. Fair value was determined based on a capitalization of earnings methodology, using Adjusted EBITDA expected to be generated multiplied by an earnings multiple. The key assumptions in developing Adjusted EBITDA include management’s assessment of future trends in the industry and are based on both external and internal sources. The forecasted 2019 Adjusted EBITDA for the remaining closures operations was prepared using certain key assumptions including selling prices, sales volumes and costs of raw materials. Earnings multiples reflect recent sale and purchase transactions and comparable company trading multiples in the same industry. These estimates represent a Level 3 hierarchy, which includes inputs that are not based on observable market data. This process resulted in the recognition of a further $67 million of impairment in net other income (expenses) in the statement of comprehensive income, including $26 million allocated to goodwill and $37 million attributable to property, plant and equipment. For certain remaining closures operations, there is no difference between the carrying value and the recoverable amount. Accordingly, a reasonably possible unexpected deterioration in financial performance or adverse change in the earnings multiple may result in a further impairment.

In performing the annual impairment test for goodwill as of December 31, 2018 and in conjunction with the Group's 2019 budgeting process, the Group determined that a goodwill impairment charge of $206 million arose in respect of Graham Packaging. The recognition of this expense was triggered by the lower than expected performance of Graham Packaging during the year ended December 31, 2018, particularly during the three months ended December 31, 2018, and lower near term earnings expectations. The estimated recoverable amount was determined using a fair value less costs of disposal methodology. This estimate of fair value represents a Level 3 hierarchy, which includes inputs that are not based on observable market data. The impairment charge was recognized in net other income (expenses) in the statement of comprehensive income. As a result of the impairment, the carrying value of Graham Packaging was the same as its recoverable amount ($2.9 billion) as of December 31, 2018. A reasonably possible unexpected deterioration in financial performance or adverse change in the earnings multiple may result in a further impairment. There was no additional impairment of goodwill recognized as a result of the 2019 annual impairment test.

For all of the Group's segments, there can be no assurances that sustained declines in macroeconomic or business conditions affecting both the industries in which the Group operates and its businesses will not occur, and were they to occur, that future declines will not result in additional impairments in future periods.

The estimated fair value less cost to dispose of the Reynolds® and Hefty® trademarks is first evaluated at the trademark level using the relief from royalty method. The royalty rates were based on observed royalty rates in the market, arm's-length royalty agreements, profit split analysis and previous transactions. The royalty rates applied ranged between 1% and 7%. The growth rates used to estimate future revenues were based on past performance, external market growth assumptions and the Group's experience of growth rates achievable in the Group's key markets. The revenue growth rates applied ranged up to 2%. The discount rate of 7.6% was based on market factors, and costs to dispose were estimated to be 2.0% of the fair value of each asset.