Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

At the end of 2017 and 2016, the gross and net amounts of intangible assets were:



(Dollars in Millions)	2017		2016
Intangible assets with definite lives:
Patents and trademarks — gross	$	36,427	10,521
Less accumulated amortization	7,223		5,076
Patents and trademarks — net	$	29,204	5,445
Customer relationships and other intangibles — gross	$	20,204	17,615
Less accumulated amortization	7,463		6,515
Customer relationships and other intangibles — net	$	12,741	11,100
Intangible assets with indefinite lives:
Trademarks	$	7,082	6,888
Purchased in-process research and development	4,201		3,443
Total intangible assets with indefinite lives	$	11,283	10,331
Total intangible assets — net	$	53,228	26,876

Goodwill as of December 31, 2017 and January 1, 2017, as allocated by segment of business, was as follows:



(Dollars in Millions)	Consumer			Pharmaceutical		Medical Devices		Total
Goodwill at January 3, 2016	$	7,240		2,889		11,500		21,629
Goodwill, related to acquisitions	1,362			—		210		1,572
Goodwill, related to divestitures	(63		)	(12	)	—		(75	)
Currency translation/other	(276		)	(37	)	(8	)	(321	)
Goodwill at January 1, 2017	$	8,263		2,840		11,702		22,805
Goodwill, related to acquisitions	102			6,161		2,200		8,463
Goodwill, related to divestitures	(74		)	(1	)	(102	)	(177	)
Currency translation/other	584			109		122		815
Goodwill at December 31, 2017	$	8,875		9,109		13,922		31,906

The weighted average amortization periods for patents and trademarks and customer relationships and other intangible assets are 12 years and 23 years, respectively. The amortization expense of amortizable assets included in cost of products sold was $3.0 billion, $1.2 billion and $1.2 billion before tax, for the fiscal years ended December 31, 2017, January 1, 2017 and January 3, 2016, respectively. The estimated amortization expense for the five succeeding years approximates $4.4 billion before tax, per year. Intangible asset write-downs are included in Other (income) expense, net.

The primary driver of the increase to intangible assets and goodwill is related to the Actelion acquisition in the fiscal second quarter of 2017, which resulted in the recording of $25.0 billion to intangible assets and $6.2 billion to goodwill. The intangible assets and goodwill amounts related to the Actelion acquisition are based on the preliminary purchase price allocation. Additionally, the Abbott Medical Optics (AMO) acquisition in the fiscal first quarter of 2017, resulted in the recording of $2.3 billion to intangible assets and $1.7 billion to goodwill. The intangible assets and goodwill amounts related to the AMO acquisition are based on the final purchase price allocation.

See Note 20 to the Consolidated Financial Statements for additional details related to acquisitions and divestitures.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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