Acquisitions, Dispositions, Goodwill and Other Intangible Assets

Business Acquisitions and Dispositions. During the quarter ended March 31, 2014, our cash investment in business acquisitions was $17 million, and consisted of a number of small acquisitions, primarily in our commercial businesses.

As a result of the 2012 transactions related to IAE International Aero Engines AG (IAE), Pratt & Whitney holds a 61% net interest in the collaboration and a 49.5% ownership interest in IAE. IAE’s business purpose is to coordinate the design, development, manufacturing and product support of the V2500 program through involvement with the collaborators. IAE retains limited equity with the primary economics of the V2500 program passed to the participants in the separate collaboration arrangement. As such, we have determined that IAE is a variable interest entity, and Pratt & Whitney its primary beneficiary under the criteria established in the FASB ASC Topic 810 “Consolidations” and has, therefore, been consolidated. The carrying amounts and classification of assets and liabilities for IAE in our Condensed Consolidated Balance Sheet as of March 31, 2014 are as follows:



(Dollars in millions)
Current assets	$	1,811
Noncurrent assets	1,096
Total assets	$	2,907

Current liabilities	$	1,990
Noncurrent liabilities	1,123
Total liabilities	$	3,113

Goodwill. Changes in our goodwill balances for the quarter ended March 31, 2014 were as follows:



(Dollars in millions)	Balance as of January 1, 2014		Goodwill resulting from business combinations		Foreign currency translation and other			Balance as of March 31, 2014
Otis	$	1,741	$	11	$	(10	)	$	1,742
UTC Climate, Controls & Security	9,727		—		30			9,757
Pratt & Whitney	1,273		—		—			1,273
UTC Aerospace Systems	15,069		—		17			15,086
Sikorsky	353		—		—			353
Total Segments	28,163		11		37			28,211
Eliminations and other	5		—		—			5
Total	$	28,168	$	11	$	37		$	28,216

Intangible Assets. Identifiable intangible assets are comprised of the following:



	March 31, 2014					December 31, 2013
(Dollars in millions)	Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization
Amortized:
Service portfolios	$	2,263	$	(1,332	)	$	2,234	$	(1,295	)
Patents and trademarks	380		(186		)	380		(181		)
IAE collaboration	2,421		(5		)	2,273		—
Customer relationships and other	12,049		(2,326		)	12,049		(2,199		)
	17,113		(3,849		)	16,936		(3,675		)
Unamortized:
Trademarks and other	2,264		—			2,260		—
Total	$	19,377	$	(3,849	)	$	19,196	$	(3,675	)

The customer relationships intangible assets include payments made to our customers to secure certain contractual rights. We amortize these intangible assets based on the underlying pattern of economic benefit, which may result in an amortization method other than straight-line. In accordance with the FASB ASC Topic 605, “Customer Payments and Incentives,” we classify amortization of such payments as a reduction of sales. The IAE collaboration intangible asset is being amortized based upon the economic pattern of benefits as represented by the underlying cash flows. Prior to the quarter ended March 31, 2014, these cash flows were negative and, accordingly, no amortization had previously been recorded. Amortization of intangible assets for the quarters ended March 31, 2014 and 2013 was $179 million and $175 million, respectively. The following is the expected amortization of intangible assets for the years 2014 through 2019, which reflects an increase in expected amortization expense due to the pattern of economic benefit on certain aerospace intangible assets increasing over time.



(Dollars in millions)	Remaining 2014		2015		2016		2017		2018		2019
Amortization expense	$	524	$	675	$	683	$	702	$	727	$	702