Other Assets

9 Months Ended

Sep. 30, 2022

The table below presents other assets by type.


	As of
	September		December
$ in millions	2022		2021
Property, leasehold improvements and equipment	$	17,167	$	18,094
Goodwill	6,288		4,285
Identifiable intangible assets	1,963		418
Operating lease right-of-use assets	2,067		2,292
Income tax-related assets	5,394		3,860
Miscellaneous receivables and other	6,366		5,659
Total	$	39,245	$	34,608

During the first nine months of 2022, the firm completed the acquisitions of (i) GreenSky, a leading technology company facilitating point-of-sale financing for merchants and consumers, in an all-stock transaction, (ii) NN Investment Partners (NNIP), a leading European asset manager, in an all-cash transaction, and (iii) NextCapital Group, Inc. (NextCapital), a digital retirement advice provider, in an all-cash transaction. These acquisitions were accounted for under the purchase method of accounting for business combinations and had an aggregate purchase price of $3.83 billion, substantially all of which related to GreenSky and NNIP. The purchase price of GreenSky has been preliminarily allocated to goodwill of approximately $1.05 billion, identifiable intangible assets of approximately $710 million and tangible assets of approximately $960 million (primarily cash and other assets), and to liabilities assumed of approximately $990 million (primarily unsecured short-term borrowings and customer and other payables). The purchase price of NNIP has been preliminarily allocated to goodwill of approximately $890 million, identifiable intangible assets of approximately $900 million, tangible assets of approximately $540 million (primarily cash and customer and other receivables), and to liabilities assumed of approximately $510 million (primarily deferred tax liabilities and customer and other payables). See below for further information about goodwill and identifiable intangible assets related to these acquisitions.

Property, Leasehold Improvements and Equipment

Property, leasehold improvements and equipment is net of accumulated depreciation and amortization of $11.87 billion as of September 2022 and $10.81 billion as of December 2021. Property, leasehold improvements and equipment included $7.20 billion as of September 2022 and $6.71 billion as of December 2021 that the firm uses in connection with its operations, and $142 million as of September 2022 and $194 million as of December 2021 of foreclosed real estate primarily related to distressed loans that were purchased by the firm. The remainder is held by investment entities, including VIEs, consolidated by the firm. Substantially all property and equipment is depreciated on a straight-line basis over the useful life of the asset. Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life of the improvement or the term of the lease. Capitalized costs of software developed or obtained for internal use are amortized on a straight-line basis over three years.

The firm tests property, leasehold improvements and equipment for impairment when events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. To the extent the carrying value of an asset or asset group exceeds the projected undiscounted cash flows expected to result from the use and eventual disposal of the asset or asset group, the firm determines the asset or asset group is impaired and records an impairment equal to the difference between the estimated fair value and the carrying value of the asset or asset group. In addition, the firm will recognize an impairment prior to the sale of an asset or asset group if the carrying value of the asset or asset group exceeds its estimated fair value.

There were $106 million of impairments during the three months ended September 2022 and no material impairments during the three months ended September 2021. There were $130 million of impairments during the nine months ended September 2022 and $134 million of impairments during nine months ended September 2021.

Goodwill

Goodwill is the cost of acquired companies in excess of the fair value of net assets, including identifiable intangible assets, at the acquisition date.

The table below presents the carrying value of goodwill by reporting unit.


	As of
	September		December
$ in millions	2022		2021
Investment Banking	$	281	$	281
Global Markets:
FICC	269		269
Equities	2,637		2,638
Asset Management	1,299		349
Consumer & Wealth Management:
Consumer banking	1,102		48
Wealth management	700		700
Total	$	6,288	$	4,285

In the table above, substantially all of the increase in goodwill from December 2021 to September 2022 was driven by the acquisitions of GreenSky and NNIP.

Goodwill is assessed for impairment annually in the fourth quarter or more frequently if events occur or circumstances change that indicate an impairment may exist. When assessing goodwill for impairment, first, a qualitative assessment can be made to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its estimated carrying value. If the results of the qualitative assessment are not conclusive, a quantitative goodwill test is performed. Alternatively, a quantitative goodwill test can be performed without performing a qualitative assessment.

The quantitative goodwill test compares the estimated fair value of each reporting unit with its estimated net book value (including goodwill and identifiable intangible assets). If the reporting unit’s estimated fair value exceeds its estimated net book value, goodwill is not impaired. An impairment is recognized if the estimated fair value of a reporting unit is less than its estimated net book value.

To estimate the fair value of each reporting unit, other than Consumer banking, a relative value technique is used because the firm believes market participants would use this technique to value these reporting units. The relative value technique applies observable price-to-earnings multiples or price-to-book multiples of comparable competitors to reporting units’ net earnings or net book value. To estimate the fair value of Consumer banking, a discounted cash flow valuation approach is used because the firm believes market participants would use this technique to value that reporting unit given its early stage of development. The estimated net carrying value of each reporting unit reflects an allocation of total shareholders’ equity and represents the estimated amount of total shareholders’ equity required to support the activities of the reporting unit under currently applicable regulatory capital requirements.

In the fourth quarter of 2021, the firm performed its annual assessment of goodwill for impairment, for each of its reporting units, by performing a qualitative assessment. Multiple factors, including performance indicators, macroeconomic indicators, firm and industry events, and fair value indicators, were assessed with respect to each of the firm’s reporting units to determine whether it was more likely than not that the estimated fair value of any of those reporting units was less than its estimated carrying value. The qualitative assessment also considered changes since a quantitative test was last performed in 2019.

As a result of the qualitative assessment, the firm determined that it was more likely than not that the estimated fair value of each reporting unit exceeded its respective estimated carrying value. Therefore, the firm determined that goodwill for each reporting unit was not impaired and that a quantitative goodwill test was not required.

Based on the evaluation of relevant factors during the first nine months of 2022, the firm determined that it was more likely than not that the estimated fair value of each of the reporting units exceeded its respective estimated carrying value as of September 2022.

Identifiable Intangible Assets

The table below presents identifiable intangible assets by reporting unit and type.


	As of
$ in millions	September 2022		December 2021
By Reporting Unit
Global Markets:
FICC	$	1	$	1
Equities	40		43
Asset Management	938		122
Consumer & Wealth Management:
Consumer banking	764		—
Wealth management	220		252
Total	$	1,963	$	418

By Type
Customer lists and merchant relationships
Gross carrying value	$	3,126	$	1,460
Accumulated amortization	(1,229)		(1,130)
Net carrying value	1,897		330

Acquired leases and other
Gross carrying value	487		500
Accumulated amortization	(421)		(412)
Net carrying value	66		88

Total gross carrying value	3,613		1,960
Total accumulated amortization	(1,650)		(1,542)
Total net carrying value	$	1,963	$	418

The firm acquired approximately $1.77 billion of identifiable intangible assets (with a weighted average amortization period of 13 years) during the nine months ended September 2022, substantially all in connection with the acquisitions of GreenSky and NNIP. Substantially all of these intangible assets consisted of merchant relationships and customer lists. During 2021, the amount of identifiable intangible assets acquired by the firm was not material.

Substantially all of the firm’s identifiable intangible assets have finite useful lives and are amortized over their estimated useful lives generally using the straight-line method.

The tables below present information about the amortization of identifiable intangible assets.


	Three Months Ended September				Nine Months Ended September
$ in millions	2022		2021		2022		2021
Amortization	$	54	$	22	$	124	$	89


	As of
$ in millions	September 2022
Estimated future amortization
Remainder of 2022	$	48
2023	$	193
2024	$	181
2025	$	164
2026	$	156
2027	$	155

The firm tests identifiable intangible assets for impairment when events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. To the extent the carrying value of an asset or asset group exceeds the projected undiscounted cash flows expected to result from the use and eventual disposal of the asset or asset group, the firm determines the asset or asset group is impaired and records an impairment equal to the difference between the estimated fair value and the carrying value of the asset or asset group. In addition, the firm will recognize an impairment prior to the sale of an asset or asset group if the carrying value of the asset or asset group exceeds its estimated fair value. There were no material impairments during each of the three and nine months ended September 2022 and September 2021.

Operating Lease Right-of-Use Assets

The firm enters into operating leases for real estate, office equipment and other assets, substantially all of which are used in connection with its operations. For leases longer than one year, the firm recognizes a right-of-use asset representing the right to use the underlying asset for the lease term, and a lease liability representing the liability to make payments. The lease term is generally determined based on the contractual maturity of the lease. For leases where the firm has the option to terminate or extend the lease, an assessment of the likelihood of exercising the option is incorporated into the determination of the lease term. Such assessment is initially performed at the inception of the lease and is updated if events occur that impact the original assessment.

An operating lease right-of-use asset is initially determined based on the operating lease liability, adjusted for initial direct costs, lease incentives and amounts paid at or prior to lease commencement. This amount is then amortized over the lease term. Right-of-use assets and operating lease liabilities recognized (in non-cash transactions for leases entered into or assumed) by the firm were $52 million for the three months ended September 2022, $86 million for the three months ended September 2021, $168 million for the nine months ended September 2022 and $230 million for the nine months ended September 2021. See Note 15 for information about operating lease liabilities.

For leases where the firm will derive no economic benefit from leased space that it has vacated or where the firm has shortened the term of a lease when space is no longer needed, the firm will record an impairment or accelerated amortization of right-of-use assets. There were no material impairments or accelerated amortizations during each of the three and nine months ended September 2022 and September 2021.

Miscellaneous Receivables and Other

Miscellaneous receivables and other included:

•Investments in qualified affordable housing projects of $751 million as of September 2022 and $714 million as of December 2021.

•Assets classified as held for sale of $1.51 billion as of September 2022 and $1.02 billion as of December 2021 related to certain of the firm’s consolidated investments within the Asset Management segment, substantially all of which consisted of property and equipment.