Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE C – GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill are as follows:

	As of June 30, 2019					As of December 31, 2018
(in millions)	Gross Carrying Amount		Accumulated Amortization/ Write-offs			Gross Carrying Amount		Accumulated Amortization/ Write-offs
Amortizable intangible assets
Technology-related	$	10,291	$	(5,425	)	$	10,197	$	(5,266	)
Patents	521		(401		)	520		(393		)
Other intangible assets	1,683		(1,018		)	1,666		(958		)
	$	12,495	$	(6,844	)	$	12,383	$	(6,617	)
Indefinite-lived intangible assets
Goodwill	$	18,351	$	(9,900	)	$	17,811	$	(9,900	)
IPR&D	715		—			486		—
Technology-related	120		—			120		—
	$	19,187	$	(9,900	)	$	18,417	$	(9,900	)

The following represents our goodwill balance by global reportable segment:

(in millions)	MedSurg			Rhythm and Neuro		Cardiovascular		Total
Balance as of December 31, 2018	$	2,063		$	1,924	$	3,925	$	7,911
Impact of foreign currency fluctuations and other changes in carrying amount	(1		)	—		2		1
Goodwill acquired	—			271		270		540
Balance as of June 30, 2019	$	2,061		$	2,194	$	4,196	$	8,451

Goodwill and Indefinite-Lived Intangible Asset Impairment Testing

We did not have any goodwill impairments in the second quarter and first six months of 2019 or 2018.

We test our goodwill balances in the second quarter of each year for impairment, or more frequently if impairment indicators are present or changes in circumstances suggest an impairment may exist. In the second quarter of 2019, we performed our annual goodwill impairment test for all of our reporting units and concluded that the fair value of each reporting unit exceeded its carrying value.

In performing the goodwill impairment assessment, we utilized both the optional qualitative assessment and the quantitative approach prescribed under FASB ASC Topic 350, Intangibles - Goodwill and Other. In 2019, we performed a qualitative assessment for our Urology and Pelvic Health, Neuromodulation and Endoscopy reporting units since their fair values have exceeded carrying value by greater than 100 percent. The remaining reporting units were quantitatively tested for impairment. For the reporting units subject to a qualitative assessment, if it is determined that it is more likely than not that the fair value of the reporting unit is less than its carrying value, the quantitative approach of the goodwill impairment test is necessary. In 2019, for all reporting units tested using the qualitative assessment, we concluded that it was unnecessary to perform the quantitative impairment test. For all reporting units tested using the quantitative approach, we concluded that the fair value of each reporting unit exceeded its carrying value.

Intangible asset impairment charges were $37 million in the second quarter of 2019 and $105 million in the first six months of 2019 and were primarily associated with amortizable technology-related intangible assets. Intangible asset impairment charges were $34 million in the second quarter and $35 million in the first six months of 2018 and were primarily associated with amortizable technology-related intangible assets.

We review intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. If we determine it is more likely than not that the asset is impaired based on our qualitative assessment of impairment indicators, we test the intangible asset for recoverability. If the carrying value of the intangible asset or asset group exceeds the undiscounted cash flows expected to

result from the use and eventual disposition of the intangible asset or asset group, we will write the carrying value down to fair value in the period impairment is identified.

Refer to Critical Accounting Policies and Estimates within Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our most recent Annual Report on Form 10-K for further discussion of our annual goodwill and intangible asset impairment testing.