Impairments and Other Charges

We carry a variety of long-lived assets on our balance sheet including property, plant and equipment, goodwill, and other intangibles. We conduct impairment tests on long-lived assets at least annually, and more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We review the recoverability of the carrying value of our assets based upon estimated future cash flows while taking into consideration assumptions and estimates including the future use of the asset, remaining useful life of the asset, and service potential of the asset. Additionally, inventories are valued at the lower of cost or market.

During the year ended December 31, 2015, as a result of the downturn in the energy market and its corresponding impact on our business outlook, we determined the carrying amount of a number of our long-lived assets exceeded their respective fair values due to projected declines in asset utilization, and that the cost of some of our inventory exceeded its market value; therefore, we recorded corresponding impairments and other charges. Additionally, we initiated a company-wide reduction in workforce by approximately 25% during 2015 intended to reduce costs and better align our workforce with anticipated activity levels in the near-term, which resulted in us recording severance costs relating to termination benefits. We also recorded a write-off of our operations in both Libya and Yemen during the first quarter of 2015 due to our decision to exit our operations in these countries. As part of the anticipated divestitures of certain businesses included in our Drilling and Evaluation operating segment, we are incurring certain non-capitalizable costs, which we have included within "other matters" in the table below.

Primarily as a result of the events described above, we recorded charges of approximately $2.2 billion and $129 million during the years ended December 31, 2015 and 2014, respectively, which consisted of equipment write-offs, asset impairments, expenses and write-downs related to idle equipment, inventory write-downs, impairments of intangible assets, severance costs, country and facility closures, and other items. We also recorded a $199 million foreign currency exchange loss in Venezuela during the first quarter of 2015 as discussed in further detail below.

The following table presents various charges we recorded during the years ended December 31, 2015 and December 31, 2014 as a result of the downturn in the energy market and other matters:



Millions of dollars	Year Ended December 31, 2015		Year Ended December 31, 2014		Income Statement Classification
Economic downturn:
Fixed asset impairments	$	760	$	47	Impairments and other charges
Inventory write-downs	484		24		Impairments and other charges
Severance costs	352		28		Impairments and other charges
Intangible asset impairments	212		10		Impairments and other charges
Other	201		20		Impairments and other charges
Other matters:
Country closures	80		—		Impairments and other charges
Other	88		—		Impairments and other charges
Total impairments and other charges	$	2,177	$	129
Venezuela currency devaluation loss	199		—		Other, net
Total charges	$	2,376	129

In February 2015, the Venezuelan government created a new foreign exchange rate mechanism, called the Marginal Currency System, or SIMADI. The new mechanism, which is the third system in a three-tier exchange control mechanism, is a floating market rate for the conversion of Bolívares to United States dollars based on supply and demand. Prior to 2015, we had remeasured our net monetary assets denominated in Bolívares using the official exchange rate of 6.3 Bolívares per United States dollar. During the first quarter of 2015, we began utilizing SIMADI to remeasure our net monetary assets denominated in Bolívares with a market rate of 192 Bolívares per United States dollar as of March 31, 2015, which resulted in us recording a foreign currency loss of $199 million during the first quarter of 2015.