Goodwill and Intangible Assets

9 Months Ended

Jul. 31, 2015

Note 10: Goodwill and Intangible Assets

Goodwill

Goodwill allocated to HP's reportable segments and changes in the carrying amount of goodwill were as follows:

	Nine months ended July 31, 2015
	Personal Systems		Printing			Enterprise Group			Enterprise Services(2)			Software			HP Financial Services		Corporate Investments		Total
	In millions
Balance at beginning of period(1)	$	2,588	$	2,591		$	16,867		$	97		$	8,852		$	144	$	—	$	31,139
Goodwill acquired during period		—		—			1,863			—			96			—		—		1,959
Goodwill adjustments		—		(11	)		(20	)		(3	)		(39	)		—		—		(73	)

Balance at end of period(1)	$	2,588	$	2,580		$	18,710		$	94		$	8,909		$	144	$	—	$	33,025


(1)	Goodwill at July 31, 2015 and October 31, 2014 is net of accumulated impairment losses of $14.5 billion. Of that amount, $8.0 billion relates to the ES segment, $5.7 billion relates to Software, and the remaining $0.8 billion relates to Corporate Investments.
(2)	Goodwill relates to the MphasiS Limited reporting unit.

During the nine months ended July 31, 2015, HP recorded approximately $2.0 billion of goodwill related to acquisitions based on its preliminary fair value estimates of the assets acquired. Goodwill adjustments primarily relate to the allocation of goodwill to the iManage and Snapfish businesses, which were sold during the period, and foreign currency fluctuations.

Goodwill is tested for impairment at the reporting unit level. As of July 31, 2015, our reporting units are consistent with the reportable segments identified in Note 2, except for ES, which includes two reporting units: MphasiS Limited; and the remainder of ES. HP will continue to evaluate the recoverability of goodwill on an annual basis as of the beginning of its fourth fiscal quarter and whenever events or changes in circumstances indicate there may be a potential impairment.

Intangible Assets

HP's intangible assets are composed of:

	As of July 31, 2015										As of October 31, 2014
	Gross		Accumulated Amortization			Accumulated Impairment Loss			Net		Gross		Accumulated Amortization			Accumulated Impairment Loss			Net
	In millions
Customer contracts, customer lists and distribution agreements	$	5,376	$	(3,596	)	$	(856	)	$	924	$	5,289	$	(3,228	)	$	(856	)	$	1,205
Developed and core technology and patents		4,485		(1,262	)		(2,138	)		1,085		4,266		(1,301	)		(2,138	)		827
Trade name and trade marks		1,664		(243	)		(1,336	)		85		1,693		(261	)		(1,336	)		96
In-process research and development		155		—			—			155		—		—			—			—

Total intangible assets	$	11,680	$	(5,101	)	$	(4,330	)	$	2,249	$	11,248	$	(4,790	)	$	(4,330	)	$	2,128

During the nine months ended July 31, 2015, the increase in gross intangible assets was due primarily to intangible assets and in-process research and development resulting from HP's acquisitions, primarily the acquisition of Aruba. The reported amounts are based on preliminary fair value estimates of the assets acquired. Additionally, $494 million of intangible assets became fully amortized and have been eliminated from gross intangible assets and accumulated amortization during this period.

As of July 31, 2015, the estimated future amortization expense related to finite-lived intangible assets was as follows:

Fiscal year	In millions
2015 (remaining 3 months)	$	245
2016		773
2017		352
2018		252
2019		213
2020		179
Thereafter		80

Total	$	2,094

- 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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