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Goodwill and other intangible assets
 9 Months Ended
May 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and other intangible assets Goodwill and other intangible assets
Goodwill and indefinite-lived intangible assets are evaluated for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or intangible asset below its carrying value. During the three months ended May 31, 2020, the Company completed a quantitative impairment analysis for goodwill and certain indefinite-lived intangible assets related to its two reporting units within Retail Pharmacy International division, Boots and Other international, as a result of the significant impact of COVID-19 on their financial performance. Based on this analysis, the Company recorded impairment charges of $1.7 billion on Boots goodwill and $0.3 billion on certain indefinite-lived Boots tradename assets.

As of May 31, 2020, Other international reporting unit's fair value was in excess of its carrying value by approximately 6% compared to 16% based on the June 1, 2019 valuation date. The fair values of the indefinite-lived tradename intangibles within the Boots reporting unit exceeded their carrying value amounts ranging from approximately 2.5% to approximately 26.5%, except for certain Boots tradename assets impaired during the three months ended May 31, 2020 and pharmacy licenses impaired during the year ended August 31, 2019. As of May 31, 2020, the carrying values of goodwill were $1.0 billion and $0.5 billion for Boots reporting unit and Other international reporting unit, respectively. As of May 31, 2020, the carrying value of the indefinite-lived intangibles within the Boots reporting unit was $6.7 billion.

As part of the Company’s impairment analysis, fair value of a reporting unit is determined using both the income and market approaches. The income approach requires management to estimate a number of factors for each reporting unit, including the projected future operating results, economic projections, anticipated future cash flows and discount rates considering the impact of COVID-19, among other potential impacts. The market approach estimates fair value using comparable marketplace fair value data from within a comparable industry grouping.

The determination of the fair value of the reporting units requires the Company to make significant estimates and assumptions including the business and financial performance of the Company’s reporting units, as well as how such performance may be impacted by COVID-19. These estimates and assumptions primarily include, but are not limited to: the selection of appropriate peer group companies, control premiums appropriate for acquisitions in the industries in which we compete, discount rates, terminal growth rates, and forecasts of revenue, operating income, depreciation, amortization and capital expenditures, including considering the impact of COVID-19.

Indefinite-lived intangible assets are tested for impairment by comparing the estimated fair value of the asset to its carrying value. If the carrying value of the asset exceeds its estimated fair value, an impairment loss is recognized and the asset is written down to its estimated fair value. Indefinite-lived intangible assets fair values are estimated using the relief from royalty method and excess earnings method of the income approach. The determination of the fair value of the indefinite-lived intangibles requires the Company to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to: forecasts of revenue, the selection of appropriate royalty rate and discount rates.

Although the Company believes its estimates of fair value are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates. Changes in assumptions concerning future financial results or other underlying assumptions, including the impact of COVID-19, could have a significant impact on either the fair value of the reporting units and indefinite-lived intangibles, the amount of any goodwill and indefinite-lived intangible impairment charges, or both. These estimates can be affected by a number of factors including, but not limited to, the impact of COVID-19, its severity, duration and its impact on global economies, general economic conditions as well as our profitability. The Company will continue to monitor these potential impacts, including the impact of COVID-19 and economic, industry and market trends and the impact these may have on Boots and Other international reporting units.

Definite-lived intangible assets are evaluated for impairment whenever events or circumstances indicate that a certain asset or asset group may be impaired. During the three month ended May 31, 2020, the Company evaluated certain purchasing and payer contracts for impairment resulting in impairment charge of $32 million.
Changes in the carrying amount of goodwill by reportable segment consist of the following (in millions):
 Retail Pharmacy USARetail Pharmacy InternationalPharmaceutical WholesaleWalgreens Boots Alliance, Inc.
August 31, 2019$10,491  $3,179  $2,890  $16,560  
Acquisitions63  —  —  63  
Impairment1
—  (1,675) —  (1,675) 
Currency translation adjustments—  (9) 9  —  
May 31, 2020$10,554  $1,495  $2,900  $14,948  

1 Recorded within Selling, general and administrative expenses.



The carrying amount and accumulated amortization of intangible assets consist of the following (in millions):

 May 31, 2020August 31, 2019
Gross amortizable intangible assets  
Customer relationships and loyalty card holders$4,252  $4,290  
Favorable lease interests and non-compete agreements1
59  654  
Trade names and trademarks436  461  
Purchasing and payer contracts341  382  
Total gross amortizable intangible assets5,088  5,787  
Accumulated amortization  
Customer relationships and loyalty card holders$1,405  $1,262  
Favorable lease interests and non-compete agreements1
26  410  
Trade names and trademarks248  250  
Purchasing and payer contracts108  99  
Total accumulated amortization1,787  2,021  
Total amortizable intangible assets, net$3,301  $3,766  
Indefinite-lived intangible assets  
Trade names and trademarks$4,997  $5,232  
Pharmacy licenses1,886  1,878  
Total indefinite-lived intangible assets$6,883  $7,110  
Total intangible assets, net$10,183  $10,876  
1Transferred favorable lease interest to right-of-use assets upon the adoption of ASC 842. Refer to note 17, new accounting pronouncements for additional information.

Amortization expense for intangible assets were $112 million and $348 million for the three and nine months ended May 31, 2020, respectively, and $142 million and $415 million for the three and nine months ended May 31, 2019, respectively.

Estimated future annual amortization expense for the next five fiscal years for intangible assets recorded at May 31, 2020 is as follows (in millions):
 20212022202320242025
Estimated annual amortization expense$428  $410  $376  $357  $326