Acquisitions, Dispositions, Goodwill and Other Intangible Assets

Business Acquisitions and Dispositions. During the six months ended June 30, 2016, our investment in business acquisitions was $538 million and consisted of the acquisition of a majority interest in an Italian heating products and services company by UTC Climate, Controls & Security and a number of small acquisitions, primarily in our commercial businesses.

Pratt & Whitney holds a 61% net collaboration interest in IAE International Aero Engines AG (IAE), 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 jet engine 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 with Pratt & Whitney its primary beneficiary, and IAE has, therefore, been consolidated. The carrying amounts and classification of assets and liabilities for IAE in our Condensed Consolidated Balance Sheet are as follows:



(Dollars in millions)	June 30, 2016		December 31, 2015
Current assets	$	2,370	$	1,920
Noncurrent assets	1,068		1,102
Total assets	$	3,438	$	3,022

Current liabilities	$	1,965	$	1,931
Noncurrent liabilities	1,281		1,355
Total liabilities	$	3,246	$	3,286

Goodwill. Changes in our goodwill balances for the six months ended June 30, 2016 were as follows:



(Dollars in millions)	Balance as of January 1, 2016		Goodwill Resulting from Business Combinations		Foreign Currency Translation and Other			Balance as of June 30, 2016
Otis	$	1,566	$	15	$	3		$	1,584
UTC Climate, Controls & Security	9,458		453		(143		)	9,768
Pratt & Whitney	1,515		—		(1		)	1,514
UTC Aerospace Systems	14,759		25		(118		)	14,666
Total Segments	27,298		493		(259		)	27,532
Eliminations and other	3		—		—			3
Total	$	27,301	$	493	$	(259	)	$	27,535

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



	June 30, 2016					December 31, 2015
(Dollars in millions)	Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization
Amortized:
Service portfolios	$	2,024	$	(1,355	)	$	1,977	$	(1,307	)
Patents and trademarks	382		(200		)	361		(189		)
IAE collaboration	3,537		(146		)	3,336		(86		)
Customer relationships and other	12,808		(3,279		)	12,430		(2,988		)
	18,751		(4,980		)	18,104		(4,570		)
Unamortized:
Trademarks and other	2,071		—			2,069		—
Total	$	20,822	$	(4,980	)	$	20,173	$	(4,570	)

Customer relationship intangible assets include payments made to our customers to secure certain contractual rights. Such payments are capitalized when there are distinct rights obtained and there are sufficient incremental cash flows to support the recoverability of the assets established. Otherwise, the applicable portion of the payments are expensed. 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 the aerospace industry, amortization based on the pattern of economic benefit generally results in lower amortization expense during the development period with increasing amortization expense as programs enter full production and aftermarket cycles. If a pattern of economic benefit cannot be reliably determined, a straight-line amortization method is used. We classify amortization of such payments as a reduction of sales. The IAE collaboration intangible asset is amortized based upon the pattern of economic benefits as represented by the underlying cash flows.

Amortization of intangible assets for the quarter and six months ended June 30, 2016 was $194 million and $381 million, respectively, compared with $175 million and $354 million for the same periods of 2015. The following is the expected amortization of intangible assets for the years 2016 through 2021, which reflects an increase in expected amortization expense due to the pattern of economic benefit on certain aerospace intangible assets.



(Dollars in millions)	Remaining 2016		2017		2018		2019		2020		2021
Amortization expense	$	395	$	839	$	849	$	860	$	831	$	891