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Goodwill, Customer Relationships and Other Intangible Assets
 6 Months Ended
Jun. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill, Customer Relationships and Other Intangible Assets Goodwill, Customer Relationships and Other Intangible Assets
Goodwill, customer relationships and other intangible assets consisted of the following:

June 30, 2021December 31, 2020
(Dollars in millions)
Goodwill$18,867 18,870 
Indefinite-life intangible assets$9 278 
Other intangible assets subject to amortization: 
Customer relationships, less accumulated amortization of $11,546 and $11,060
5,856 6,344 
Capitalized software, less accumulated amortization of $3,432 and $3,279
1,481 1,520 
Trade names, patents and other, less accumulated amortization of $149 and $120
317 77 
Total other intangible assets, net$7,663 8,219 

When we acquired Embarq Corporation ("Embarq") in 2009, we acquired certain right-of-way assets and, because there were no legal, regulatory, contractual or other factors that would reasonably limit the useful life of these assets, we classified them as indefinite-lived and, as such, these assets were not amortized. However, as we leverage our fiber infrastructure assets, our reliance on the legacy infrastructure (largely copper-based) acquired from Embarq is diminishing. Our recent digital transformation efforts have prompted management to reassess and ultimately change the accounting treatment of these indefinite-lived assets to align with our focus on growth products versus our declining products. As a result, during the first quarter of 2021, we reclassified an indefinite-lived intangible asset to definite-lived intangible asset. As of January 1, 2021 we began amortizing the $268 million asset over its estimated nine-year remaining life. This change in the estimated remaining economic life resulted in an increase in amortization expense of approximately $7 million and $15 million, respectively, for the three and six months ended June 30, 2021, and is expected to increase amortization expense by approximately $30 million for the year ending December 31, 2021. The increase in amortization expense, net of tax, reduced consolidated net income by approximately $5 million and $11 million, respectively, with no impact per basic and diluted common share for the three months ended June 30, 2021 and a $0.01 reduction to basic and diluted common share for the six months ended June 30, 2021 and is expected to reduce consolidated net income by approximately $23 million, or $0.02 per basic and diluted common share, for the year ending December 31, 2021.

Our goodwill was derived from numerous acquisitions where the purchase price exceeded the fair value of the net assets acquired.

We assess our goodwill and other indefinite-lived intangible assets for impairment annually, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment. We are required to write down the value of goodwill only when our assessment determines the carrying value of equity of any of our reporting units exceeds its fair value. Our annual impairment assessment date for goodwill is October 31, at which date we assess our reporting units. Our annual impairment assessment date for indefinite-lived intangible assets other than goodwill is December 31.
Our reporting units are not discrete legal entities with discrete full financial statements. Our assets and liabilities are employed in and relate to the operations of multiple reporting units. For each reporting unit, we compare its estimated fair value of equity to its carrying value of equity that we assign to the reporting unit. If the estimated fair value of the reporting unit is greater than the carrying value, we conclude that no impairment exists. If the estimated fair value of the reporting unit is less than the carrying value, we record an impairment equal to the excess amount. Depending on the facts and circumstances, we typically estimate the fair value of our reporting units by considering either or both of (i) a discounted cash flow method, which is based on the present value of projected cash flows over a discrete projection period and a terminal value, which represents the value of expected normalized cash flows of the reporting units following the discrete projection period, and (ii) a market approach, which includes the use of market multiples of publicly-traded companies whose services are comparable to ours.

We completed an internal reorganization in January 2021. We now, as a result, report two segments: Business and Mass Markets. The following table shows the rollforward of goodwill assigned to our reportable segments, including the reorganization, from December 31, 2020 through June 30, 2021:

 International and Global AccountsEnterpriseSmall and Medium BusinessWholesaleConsumerBusinessMass MarketsTotal
 (Dollars in millions)
As of December 31, 2020(1)
$2,555 4,738 2,808 3,114 5,655 — — 18,870 
January 2021 reorganization(2,555)(4,738)(2,808)(3,114)(5,655)12,173 6,697 — 
Effect of foreign currency exchange rate change and other— — — — — (3)— (3)
As of June 30, 2021(1)
$— — — — — 12,170 6,697 18,867 
______________________________________________________________________
(1)Goodwill at June 30, 2021 and December 31, 2020 is net of accumulated impairment losses of $12.9 billion.

The January 2021 reorganization was considered a change in event or circumstance which required an assessment of our goodwill for impairment. We performed a qualitative impairment assessment in the first quarter of 2021 and concluded it is more likely than not that the fair value of each of our reporting units exceeded the carrying value of equity of our reporting units at January 31, 2021. Therefore, no impairment existed as of our assessment date.

Total amortization expense for intangible assets for the three months ended June 30, 2021 and 2020 totaled $318 million and $440 million, respectively, and for the six months ended June 30, 2021 and 2020 totaled $743 million and $871 million, respectively. As of June 30, 2021, the gross carrying amount of goodwill, customer relationships, indefinite-life and other intangible assets was $41.7 billion.

We estimate that total amortization expense for intangible assets for the years ending December 31, 2021 through 2025 will be as follows:

 (Dollars in millions)
2021 (remaining six months)$597 
20221,087 
2023991 
2024893 
2025803