4. GOODWILL AND LONG-LIVED ASSETS

In addition to our annual goodwill impairment test performed in the fourth quarter, we perform interim impairment tests for long-lived and intangible assets, including goodwill, whenever events or changes in circumstances indicate that the carrying amount of the asset (group), which is the reporting unit for goodwill purposes, may not be recoverable. As noted in the Company’s 2017 Annual Report on Form 10-K, our annual impairment test indicated that the Company's hardware segment had the least amount of excess fair value over the carrying value, where the excess of fair value over carrying value was approximately 20%.

Late in the quarter ended June 30, 2018, we determined there was an indication that the carrying value of the net assets assigned to the Hardware reporting unit may not be recoverable. This determination was based on the lowering of our full year forecast for 2018, driven by reduced revenue and gross margin rates expected for the third and fourth quarters of 2018, and the resulting impact on the current year and future cash flow projections of the Hardware reporting unit.

Given the undiscounted cash flows of the asset group, which we determined to be at the reporting unit level, were below the carrying value of the net assets, we recorded an impairment charge for the difference between the fair value and the carrying value of the long-lived assets. The fair value of the long-lived assets was determined based on the nature of the asset through either third party appraisals, replacement cost or discounted cash flow analysis.

For goodwill, consistent with the annual impairment test, fair value of the Hardware reporting unit was estimated using a weighted methodology considering the output from both the income and market approaches. The income approach incorporates the use of discounted cash flow (DCF) analysis. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including markets and market shares, sales volumes and prices, costs to produce, tax rates, capital spending, discount rate and working capital changes. The market approach is performed using the Guideline Public Companies (GPC) method which is based on earnings multiple data. Under both approaches, the fair value of the Hardware reporting unit was determined to be below the net asset value. Accordingly, we recorded an impairment charge up to the value of the goodwill assigned to the Hardware reporting unit which was the full amount recorded. Refer to Note 1. Basis of Presentation and Summary of Significant Accounting Policies for disclosure of adoption of new accounting guidance which eliminates the requirement to measure the implied fair value of goodwill to measure a goodwill impairment charge.

As a result, in the three months ended June 30, 2018 the Company recorded impairment charges of $21 million related to property, plant and equipment held and used in NCR's hardware reporting unit, $16 million related to purchased intangibles and $146 million for goodwill assigned to the Hardware reporting unit. These charges were recorded in the line item asset impairment charges in our Condensed Consolidated Statement of Operations for the nine months ended September 30, 2018.

The carrying amounts of goodwill by segment as of September 30, 2018 and December 31, 2017 are included in the table below. Foreign currency fluctuations are included within other adjustments.



	December 31, 2017															September 30, 2018
In millions	Goodwill		Accumulated Impairment Losses			Total		Additions		Impairment			Other			Goodwill		Accumulated Impairment Losses			Total
Software	$	1,944	$	(7	)	$	1,937	$	—	$	—		$	(6	)	$	1,938	$	(7	)	$	1,931
Services	658		—			658		—		—			—			658		—			658
Hardware	162		(16		)	146		—		(146		)	—			162		(162		)	—
Total goodwill	$	2,764	$	(23	)	$	2,741	$	—	$	(146	)	$	(6	)	$	2,758	$	(169	)	$	2,589

NCR’s purchased intangible assets, reported in intangibles, net in the Condensed Consolidated Balance Sheets, were specifically identified when acquired, and are deemed to have finite lives. The gross carrying amount and accumulated amortization for NCR’s identifiable intangible assets were as set forth in the table below.



	Amortization Period (in Years)	September 30, 2018					December 31, 2017
In millions	Amortization Period (in Years)	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Identifiable intangible assets
Reseller & customer relationships	1 - 20	$	659	$	(205	)	$	659	$	(170	)
Intellectual property	2 - 8	397		(369		)	410		(351		)
Customer contracts	8	89		(85		)	89		(81		)
Tradenames	2 - 10	73		(58		)	73		(51		)
Total identifiable intangible assets		$	1,218	$	(717	)	$	1,231	$	(653	)

The aggregate amortization expense (actual and estimated) for identifiable intangible assets for the following periods is:



In millions	Three months ended September 30, 2018		Nine months ended September 30, 2018		Remainder of 2018 (estimated)
Amortization expense	$	20	$	64	$	21



	For the years ended December 31 (estimated)
In millions	2019		2020		2021		2022		2023
Amortization expense	$	76	$	58	$	50	$	45	$	43