Intangible Assets Including Goodwill

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Including Goodwill

Intangible Assets Including Goodwill:

Intangible Assets

The following tables present the company's intangible asset balances by major asset class.

	At June 30, 2023
(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount*
Intangible asset class:
Capitalized software	$	1,622	$	(707)	$	915
Client relationships	8,274		(3,056)		5,217
Completed technology	5,131		(2,174)		2,957
Patents/trademarks	1,781		(378)		1,403
Other**	19		(16)		3
Total	$	16,827	$	(6,331)	$	10,496

	At December 31, 2022
(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount*
Intangible asset class:
Capitalized software	$	1,650	$	(705)	$	945
Client relationships	8,559		(2,951)		5,608
Completed technology	5,220		(2,045)		3,175
Patents/trademarks	2,140		(688)		1,452
Other**	19		(15)		4
Total	$	17,588	$	(6,404)	$	11,184

*Amounts as of June 30, 2023 and December 31, 2022 include an increase in net intangible asset balances of $24 million and a decrease in net intangible asset balances of $198 million, respectively, due to foreign currency translation.

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

The net carrying amount of intangible assets decreased $688 million during the first six months of 2023, primarily due to intangible asset amortization, partially offset by additions of capitalized software and acquired intangibles. The aggregate intangible asset amortization expense was $556 million and $1,104 million for the second quarter and first six months of 2023, respectively, compared to $625 million and $1,251 million for the second quarter and first six months of 2022, respectively. In the first six months of 2023, the company retired $1,189 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount.

The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet was estimated to be the following at June 30, 2023:

(Dollars in millions)	Capitalized Software		Acquired Intangibles		Total
Remainder of 2023	$	303	$	786	$	1,089
2024	410		1,557		1,967
2025	175		1,538		1,713
2026	27		1,515		1,542
2027	—		1,496		1,496
Thereafter	—		2,688		2,688

Goodwill

The changes in the goodwill balances by segment for the six months ended June 30, 2023 and for the year ended December 31, 2022 were as follows:

(Dollars in millions)	Balance		Goodwill Additions		Purchase Price Adjustments				Foreign Currency Translation and Other Adjustments*		Balance
Segment	1/1/2023						Divestitures				6/30/2023
Software	$	43,657	$	267	$	(7)	$	—	$	88	$	44,005
Consulting	7,928		23		6		—		43		8,000
Infrastructure	4,363		12		—		—		4		4,380
Other	—		—		—		—		—		—
Total	$	55,949	$	302	$	(1)	$	—	$	136	$	56,385

(Dollars in millions)	Balance		Goodwill Additions		Purchase Price Adjustments				Foreign Currency Translation and Other Adjustments*		Balance
Segment	1/1/2022						Divestitures				12/31/2022
Software	$	43,966	$	568	$	(118)	$	—	$	(760)	$	43,657
Consulting	6,797		1,366		(42)		—		(192)		7,928
Infrastructure	4,396		—		—		(1)		(32)		4,363
Other**	484		—		—		(484)		—		—
Total	$	55,643	$	1,934	$	(159)	$	(485)	$	(984)	$	55,949

*Primarily driven by foreign currency translation.

**The company derecognized goodwill related to the divestiture of its healthcare software assets in the second quarter of 2022.

There were no goodwill impairment losses recorded during the first six months of 2023 or full-year 2022 and the company has no accumulated impairment losses. Purchase price adjustments recorded in the first six months of 2023 and full-year 2022 were related to acquisitions that were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. Net purchase price adjustments recorded in the first six months of 2023 were not material. Net purchase price adjustments recorded in 2022 primarily related to deferred tax assets and liabilities associated with the Turbonomic acquisition.