Intangible Assets Including Goodwill:

9 Months Ended

Sep. 30, 2014

Intangible Assets Including Goodwill:

10. Intangible Assets Including Goodwill: The following table details the company’s intangible asset balances by major asset class:


	At September 30, 2014
(Dollars in millions)	Gross Carrying		Accumulated		Net Carrying
Intangible asset class	Amount		Amortization		Amount
Capitalized software	$	1,412	$	(689)	$	723
Client relationships		2,219		(1,204)		1,015
Completed technology		2,941		(1,497)		1,444
In-process R&D		2		—		2
Patents/trademarks		376		(199)		176
Other*		18		(6)		13
Total	$	6,967	$	(3,594)	$	3,373

	At December 31, 2013
(Dollars in millions)	Gross Carrying		Accumulated		Net Carrying
Intangible asset class	Amount		Amortization		Amount
Capitalized software	$	1,494	$	(699)	$	794
Client relationships		2,148		(977)		1,171
Completed technology		2,910		(1,224)		1,687
In-process R&D		13		—		13
Patents/trademarks		358		(154)		204
Other*		7		(5)		2
Total	$	6,930	$	(3,059)	$	3,871

* Other intangibles are primarily acquired proprietary and non-proprietary business processes, methodologies and systems.

The net carrying amount of intangible assets decreased $498 million during the first nine months of 2014, primarily due to amortization, partially offset by intangible asset additions resulting from acquisitions. The aggregate intangible amortization expense was $339 million and $1,018 million for the third quarter and first nine months of 2014, respectively, versus $350 million and $1,007 million for the third quarter and first nine months of 2013, respectively. In addition, in the first nine months of 2014, the company retired $474 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount.

The amortization expense for each of the five succeeding years relating to intangible assets currently recorded in the Consolidated Statement of Financial Position is estimated to be the following at September 30, 2014:


	Capitalized		Acquired
(Dollars in millions)	Software		Intangibles		Total
2014 (for Q4)	$	134	$	220	$	353
2015		379		659		1,038
2016		170		621		791
2017		41		491		532
2018		—		349		349

The change in the goodwill balances by reportable segment, for the nine months ended September 30, 2014 and for the year ended December 31, 2013 are as follows:

									Foreign
									Currency
					Purchase				Translation
(Dollars in millions)	Balance		Goodwill		Price				And Other		Balance
Segment	01/01/14		Additions		Adjustments		Divestitures		Adjustments		9/30/14
Global Business Services	$	4,334	$	—	$	—	$	—	$	(142)	$	4,191
Global Technology Services		4,129		11		21		(52)		(56)		4,055
Software		21,121		434		(16)		(16)		(313)		21,210
Systems and Technology		1,601		—		—		—		(11)		1,589
Total	$	31,184	$	445	$	5	$	(67)	$	(522)	$	31,045

									Foreign
									Currency
					Purchase				Translation
(Dollars in millions)	Balance		Goodwill		Price				And Other		Balance
Segment	01/01/13		Additions		Adjustments		Divestitures		Adjustments		12/31/13
Global Business Services	$	4,357	$	—	$	0	$	(3)	$	(21)	$	4,334
Global Technology Services		2,916		1,246		17		—		(50)		4,129
Software		20,405		987		11		(4)		(279)		21,121
Systems and Technology		1,568		13		33		—		(14)		1,601
Total	$	29,247	$	2,246	$	61	$	(7)	$	(363)	$	31,184

Purchase price adjustments recorded in the first nine months of 2014 and full year 2013 were related to acquisitions that were completed on or prior to December 31, 2013 or December 31, 2012, respectively, and were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. There were no goodwill impairment losses recorded during the first nine months of 2014 or the full year of 2013 and the company has no accumulated impairment losses.

- 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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