Intangible Assets Including Goodwill

12 Months Ended

Dec. 31, 2015

Intangible Assets Including Goodwill

Note I.

Intangible Assets Including Goodwill

Intangible Assets

The following table details the company’s intangible asset balances by major asset class.


($ in millions)

		Gross Carrying		Accumulated		Net Carrying
At December 31, 2015:		Amount		Amortization		Amount
Intangible asset class
	Capitalized software	$	1,348	$	(581)	$	767
	Client relationships		1,856		(927)		929
	Completed technology		2,960		(1,397)		1,563
	Patents/trademarks		335		(142)		193
	Other*		44		(10)		35
Total		$	6,543	$	(3,057)	$	3,487

	* Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems


($ in millions)

		Gross Carrying		Accumulated		Net Carrying
At December 31, 2014:		Amount		Amortization		Amount
Intangible asset class
	Capitalized software	$	1,375	$	(679)	$	696
	Client relationships		2,208		(1,271)		937
	Completed technology		2,831		(1,533)		1,298
	Patents/trademarks		374		(214)		161
	Other*		18		(6)		12
Total		$	6,806	$	(3,702)	$	3,104

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

The net carrying amount of intangible assets increased $383 million during the year ended December 31, 2015, primarily due to intangible asset additions resulting from acquisitions, partially offset by amortization. There was no impairment of intangible assets recorded in 2015 and 2014. The aggregate intangible amortization expense was $1,193 million and $1,347 million for the years ended December 31, 2015 and 2014, respectively. In addition, in 2015 and 2014, respectively, the company retired $1,809 million and $724 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 December 31, 2015:


($ in millions)

	Capitalized		Acquired
	Software		Intangibles		Total
2016	$	426	$	760	$	1,185
2017		256		650		906
2018		85		492		577
2019		—		338		338
2020		—		240		240

Goodwill

As described in Note T, “Segment Information,” the company changed its reportable segments in January 2016. Goodwill was assigned to the new reportable segments on a fair value allocation basis. The changes in the goodwill balances by reportable segment, for the years ended December 31, 2015 and 2014, are as follows:


($ in millions)

									Foreign
									Currency
	Balance				Purchase				Translation			Balance
	January 1,		Goodwill		Price				And Other			December 31,
Segment	2015		Additions		Adjustments		Divestitures		Adjustments*			2015
Cognitive Solutions	$	15,156	$	1,020	$	(2)	$	(18)		$	(535)	$	15,621
Global Business Services		4,555		74		0		(1)			(232)		4,396
Technology Services &
Cloud Platforms		9,373		1,087		(1)		(7)			(296)		10,156
Systems		1,472		410		0		—			(33)		1,848
Total	$	30,556	$	2,590	$	(3)	$	(26)		$	(1,096)	$	32,021

*Primarily driven by foreign currency translation.


($ in millions)

									Foreign
									Currency
	Balance				Purchase				Translation		Balance
	January 1,		Goodwill		Price				And Other		December 31,
Segment	2014		Additions		Adjustments		Divestitures		Adjustments*		2014
Cognitive Solutions	$	15,244	$	311	$	(12)	$	(14)	$	(372)	$	15,156
Global Business Services		4,855		—		0		(52)		(248)		4,555
Technology Services &
Cloud Platforms		9,485		131		16		(8)		(252)		9,373
Systems		1,601		—		—		(110)		(19)		1,472
Total	$	31,184	$	442	$	4	$	(183)	$	(891)	$	30,556

*Primarily driven by foreign currency translation.

Purchase price adjustments recorded in 2015 and 2014 were related to acquisitions that were completed on or prior to December 31, 2014 or December 31, 2013, 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 full year of 2015 or 2014 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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