Acquisitions, Dispositions, Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2017

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]

Acquisitions, Dispositions, Goodwill and Other Intangible Assets [Text Block]

Acquisitions, Dispositions, Goodwill and Other Intangible Assets

Business Acquisitions and Dispositions. During the quarter ended March 31, 2017, our investment in business acquisitions was $95 million, and consisted of a number of small acquisitions, primarily in our commercial businesses.

Goodwill. Changes in our goodwill balances for the quarter ended March 31, 2017 were as follows:

(Dollars in millions)	Balance as of January 1, 2017		Goodwill  Resulting from Business Combinations			Foreign Currency Translation and Other		Balance as of March 31, 2017
Otis	$	1,575	$	(7	)	$	57	$	1,625
UTC Climate, Controls & Security	9,487		41			93		9,621
Pratt & Whitney	1,511		—			—		1,511
UTC Aerospace Systems	14,483		—			30		14,513
Total Segments	27,056		34			180		27,270
Eliminations and other	3		—			—		3
Total	$	27,059	$	34		$	180	$	27,273

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

	March 31, 2017					December 31, 2016
(Dollars in millions)	Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization
Amortized:
Service portfolios	$	2,073	$	(1,412	)	$	1,995	$	(1,344	)
Patents and trademarks	384		(208		)	378		(201		)
Collaboration intangible assets	3,825		(255		)	3,724		(211		)
Customer relationships and other	12,967		(3,640		)	12,798		(3,480		)
	19,249		(5,515		)	18,895		(5,236		)
Unamortized:
Trademarks and other	2,046		—			2,025		—
Total	$	21,295	$	(5,515	)	$	20,920	$	(5,236	)

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 collaboration intangible assets are amortized based upon the pattern of economic benefits as represented by the underlying cash flows.

Amortization of intangible assets was $205 million and $187 million for the quarters ended March 31, 2017 and 2016, respectively. The following is the expected amortization of intangible assets for the years 2017 through 2022, which reflects the pattern of expected economic benefit on certain aerospace intangible assets.

(Dollars in millions)	Remaining 2017		2018		2019		2020		2021		2022
Amortization expense	$	623	$	855	$	868	$	848	$	817	$	805