Equity Method Investments

The Company includes investments which are accounted for using the equity method, under Investments in equity interests on the Company's Consolidated Balance Sheets. As of October 31, 2018 and October 31, 2017, the Company's Investments in equity interests were $2.4 billion and $2.5 billion, respectively, primarily related to a 49% equity interest in H3C.

Investment in H3C

In the periods presented, the Company recorded its interest in the net earnings of H3C along with an adjustment to eliminate unrealized profits on intra-entity sales, and the amortization of basis difference, within Earnings (loss) from equity interests in the Consolidated Statements of Earnings.

During fiscals 2018 and 2017, the Company received a cash dividend of $164 million and $98 million, respectively, from H3C. This amount was accounted for as a return on investment and reflected as a reduction in the carrying balance of the Company's Investments in equity interests in its Consolidated Balance Sheets.

The difference between the sale date carrying value of the Company's investment in H3C and its proportionate share of the net assets of H3C, created a basis difference of $2.5 billion, which was allocated as follows:



	In millions
Equity method goodwill	$	1,674
Intangible assets	749
In-process research and development	188
Deferred tax liabilities	(152		)
Other	75
Basis difference	$	2,534

The Company amortizes the basis difference over the estimated useful lives of the assets that gave rise to this difference. The weighted-average life of the H3C intangible assets is five years and is being amortized using the straight-line method. As of October 31, 2018 and 2017, the Company determined that no impairment of its equity method investments existed. The Company recorded earnings from equity interests of $38 million in fiscal 2018 and loss from equity interests of $23 million and $76 million in fiscals 2017 and 2016, respectively, in the Consolidated Statements of Earnings. For fiscal 2018, Earnings (loss) from equity interests consists of the Company's share of H3C's net income of $192 million, partially offset by basis difference amortization of $151 million and an adjustment related to elimination of profit on intra-entity sales and withholding taxes of $3 million. For fiscal 2017, Earnings (loss) from equity interests consists of basis difference amortization of $155 million, partially offset by the Company's share of H3C's net income of $127 million and an adjustment related to elimination of profit on intra-entity sales of $5 million. For fiscal 2016, Earnings (loss) from equity interests consists of basis difference amortization of $93 million and an adjustment related to elimination of profit on intra-entity sales of $15 million, partially offset by the Company's share of H3C's net income of $32 million. The earnings and losses from equity interests are reflected as an adjustment to the carrying amount of Investments in equity interests in the Consolidated Balance Sheets as of October 31, 2018 and 2017.

The Company also has commercial arrangements with H3C to buy and sell HPE branded servers, storage and networking products and HPE Pointnext services. During fiscals 2018, 2017 and 2016, HPE recorded approximately $1.3 billion, $1.2 billion and $0.5 billion of sales to H3C and $273 million, $331 million and $169 million of purchases from H3C, respectively. Net payables due to H3C as of October 31, 2018 and 2017 were approximately $43 million and $64 million, respectively.