Goodwill and Other Intangible Assets (Notes)

12 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

The changes in the carrying amount of goodwill in each of the Company’s reportable segments for the fiscal years ended September 30, 2020 and 2019 were as follows (in millions):


	September 30, 2018		Business Acquisitions		Business Divestitures		Impairments		Currency Translation and Other		September 30, 2019
Building Solutions North America	$	9,603	$	—	$	—	$	—	$	(15)	$	9,588
Building Solutions EMEA/LA	1,950		6		(1)		—		(106)		1,849
Building Solutions Asia Pacific	1,235		8		—		—		(49)		1,194
Global Products	5,593		11		(22)		—		(35)		5,547
Total	$	18,381	$	25	$	(23)	$	—	$	(205)	$	18,178

	September 30, 2019		Business Acquisitions		Business Divestitures		Impairments		Currency Translation and Other		September 30, 2020
Building Solutions North America	$	9,588	$	—	$	—	$	(424)	$	(4)	$	9,160
Building Solutions EMEA/LA	1,849		35		—		—		83		1,967
Building Solutions Asia Pacific	1,194		—		(11)		—		43		1,226
Global Products	5,547		21		—		—		11		5,579
Total	$	18,178	$	56	$	(11)	$	(424)	$	133	$	17,932

The fiscal 2019 Global Products business divestiture amount includes $22 million of goodwill transferred to noncurrent assets held for sale in the consolidated statements of financial position related to the fiscal 2020 disposal of a business within the Global Products segment.

At September 30, 2018, accumulated goodwill impairment charges included $47 million related to the Building Solutions EMEA/LA - Latin America reporting unit.

The Company reviews goodwill for impairment during the fourth fiscal quarter or more frequently if events or changes in circumstances indicate the asset might be impaired. The Company considered the ongoing deterioration in general economic and market conditions due to the COVID-19 pandemic and its impact on each of the Company’s reporting units’ performance. Due to further declines in cash flow projections of the North America Retail reporting unit in the third quarter of fiscal 2020 as a result of the COVID-19 pandemic, the Company concluded a triggering event occurred requiring assessment of impairment for its North America Retail reporting unit. As a result, the Company recorded a non-cash impairment charge of $424 million within restructuring and impairment costs in the consolidated statements of income in the third quarter of fiscal 2020, which was determined by comparing the carrying amount of a reporting unit to its fair value in accordance with ASU No. 2017-04, "Intangible - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which the Company early adopted. The North America Retail reporting unit has a remaining goodwill balance of $230 million at September 30, 2020. The Company used a discounted cash flow model to estimate the fair value of the reporting unit. Other than management's internal projections of future cash flows, the primary assumptions used in the model were the weighted-average cost of capital and long-term growth rates, which are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." Although the Company's cash flow forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management is using to operate the underlying business, there was significant judgment in determining the expected future cash flows attributable to the North America Retail reporting unit.

There were no goodwill impairments resulting from the fiscal 2020 and 2019 annual impairment tests. With the exception of the North America Retail reporting unit that had a recent goodwill impairment and is recorded at fair value, no reporting unit was determined to be at risk of failing the goodwill impairment test. The estimated fair value for North America Retail reporting unit exceeded its carrying value by 6%. The Company performs impairment reviews for its reporting units, which have been determined to be the Company’s reportable segments or one level below the reportable segments in certain instances, using a fair value method based on management’s judgments and assumptions or third party valuations. The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. In estimating the fair value, the Company uses multiples of earnings based on the average of published multiples of earnings of comparable entities with similar operations and economic characteristics and applies the multiples to the Company's average of historical and future financial results for each reporting unit. In certain instances, the Company uses discounted cash flow analyses or estimated sales price to further support the fair value estimates. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." The estimated fair value is then compared with the carrying amount of the reporting unit, including recorded goodwill. The Company is subject to financial statement risk to the extent that the carrying amount exceeds the estimated fair value.

The assumptions included in the impairment tests require judgment, and changes to these inputs could impact the results of the calculations. The primary assumptions used in the impairment tests were management's projections of future cash flows. Although the Company's cash flow forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management is using to operate the underlying businesses, there are significant judgments in determining the expected future cash flows attributable to a reporting unit.

The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term revenue growth projections, profitability, discount rates, recent market valuations from transactions by comparable companies, volatility in the Company's market capitalization, and general industry, market and macro-economic conditions. It is possible that future changes in such circumstances, including a more prolonged and/or severe COVID-19 pandemic, or future changes in the variables associated with the judgments, assumptions and estimates used in assessing the fair value of the reporting unit, would require the Company to record additional non-cash impairment charges.

The Company’s other intangible assets, primarily from business acquisitions valued based on independent appraisals, consisted of (in millions):


	September 30, 2020						September 30, 2019
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Amortized intangible assets
Technology	$	1,332	$	(497)	$	835	$	1,307	$	(370)	$	937
Customer relationships	2,773		(969)		1,804		2,722		(759)		1,963
Miscellaneous	657		(268)		389		584		(224)		360
Total amortized intangible assets	4,762		(1,734)		3,028		4,613		(1,353)		3,260
Unamortized intangible assets
Trademarks/tradenames	2,248		—		2,248		2,282		—		2,282
Miscellaneous	80		—		80		90		—		90
	2,328		—		2,328		2,372		—		2,372
Total intangible assets	$	7,090	$	(1,734)	$	5,356	$	6,985	$	(1,353)	$	5,632

The Company reviews indefinite-lived intangible assets for impairment during the fourth fiscal quarter or more frequently if events or changes in circumstances indicate the asset might be impaired. Indefinite-lived intangible assets primarily consist of trademarks and tradenames and are tested for impairment using a relief-from-royalty method. During the second and third quarters of fiscal 2020, the Company determined that it had a triggering event at each reporting period end requiring assessment of impairment for certain of its indefinite-lived intangible assets due to declines in revenue directly attributable to the COVID-19 pandemic. As a result, the Company recorded an impairment charge of $62 million related primarily to the Company's retail business indefinite-lived intangible assets within restructuring and impairment costs in the consolidated statements of income in the second quarter of fiscal 2020. No further impairment was required to be recorded in the third quarter of fiscal 2020 as a result of the completed impairment assessment.

There were no indefinite-lived intangible asset impairments resulting from fiscal 2020 and 2019 annual impairment tests. The estimated fair values of all indefinite-lived intangibles substantially exceeded their carrying values, with the exception of the indefinite-lived trademarks related to the Company's security and Asia Pacific subscriber businesses. The estimated fair value for the security and Asia Pacific indefinite-lived trademarks exceeded their carrying value by 4% and 2%, respectively. The carrying amount of the security and Asia Pacific indefinite-lived trademarks as of September 30, 2020 was $299 million and $37 million, respectively.

The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term revenue growth projections, discount rates and general industry, market and macro-economic conditions. It is possible that future changes in such circumstances, including a more prolonged and/or severe COVID-19 pandemic, or future changes in the variables associated with the judgments, assumptions and estimates used in assessing the fair value of the indefinite-lived intangible assets, would require the Company to record an additional non-cash impairment charge.

Amortization of other intangible assets included within continuing operations for the fiscal years ended September 30, 2020, 2019 and 2018 was $386 million, $377 million and $376 million, respectively. Excluding the impact of any future acquisitions, the Company anticipates amortization for fiscal 2021, 2022, 2023, 2024 and 2025 will be approximately $404 million, $403 million, $402 million, $383 million and $365 million, respectively.