Goodwill and Other Intangible Assets

12 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

13. Goodwill and Other Intangible Assets

Changes in goodwill by reportable segment for fiscal 2016, 2017 and 2018 are as follows:


	Millions of yen
	Corporate Financial Services			Maintenance Leasing		Real Estate			Investment and Operation			Retail		Overseas Business			Total
Balance at March 31, 2015
Goodwill	¥	55,045		¥	282	¥	19,203		¥	43,841		¥	15,424	¥	248,961		¥	382,756
Accumulated impairment losses		(807	)		0		(8,708	)		(39	)		0		(587	)		(10,141	)
		54,238			282		10,495			43,802			15,424		248,374			372,615
Acquired		1,158			0		0			29,365			0		3,796			34,319
Impairment		(30	)		0		0			0			0		0			(30	)
Other (net)*		0			0		0			(6,260	)		0		(68,491	)		(74,751	)

Balance at March 31, 2016
Goodwill		56,203			282		19,203			66,946			15,424		184,266			342,324
Accumulated impairment losses		(837	)		0		(8,708	)		(39	)		0		(587	)		(10,171	)
		55,366			282		10,495			66,907			15,424		183,679			332,153
Acquired		0			0		0			26,316			0		7,054			33,370
Impairment		0			0		0			0			0		(2,785	)		(2,785	)
Other (net)*		0			0		(31	)		(11,342	)		0		(10,187	)		(21,560	)

Balance at March 31, 2017
Goodwill		56,203			282		19,172			81,920			15,424		181,133			354,134
Accumulated impairment losses		(837	)		0		(8,708	)		(39	)		0		(3,372	)		(12,956	)
		55,366			282		10,464			81,881			15,424		177,761			341,178
Acquired		0			9,258		0			13,517			0		20,158			42,933
Impairment		0			0		0			0			0		0			0
Other (net)*		0			0		0			(20,673	)		0		5,187			(15,486	)

Balance at March 31, 2018
Goodwill		56,203			9,540		19,172			74,764			15,424		206,478			381,581
Accumulated impairment losses		(837	)		0		(8,708	)		(39	)		0		(3,372	)		(12,956	)

	¥	55,366		¥	9,540	¥	10,464		¥	74,725		¥	15,424	¥	203,106		¥	368,625

Other includes foreign currency translation adjustments, decreases due to sale of ownership interest in subsidiaries and certain other reclassifications. In the Overseas Business segment, there was a decrease of ¥57,153 million during fiscal 2016 due to the partial sale of shares of Houlihan Lokey, which as a result of the sale changed from a consolidated subsidiary to an equity method affiliate.

As a result of the impairment test, the Company and its subsidiaries recognized an impairment loss on goodwill of ¥30 million in Corporate Financial Services segment during fiscal 2016. This impairment loss is included in other (income) and expense, net in the consolidated statements of income. The fair values of the reporting units were measured using mainly the discounted cash flow methodologies and the business enterprise value multiples methodologies. The Company and its subsidiaries recognized an impairment loss on goodwill of ¥2,785 million in Overseas Business segment during fiscal 2017. This impairment loss is included in other (income) and expense, net in the consolidated statements of income. This impairment loss was recognized as a result of reduction in the fair value of an overseas subsidiary due to increases in the credit losses from installment loans, which brought the fair value of the reporting unit below its carrying amount.

The Company and its subsidiaries recognized no impairment loss on goodwill during fiscal 2018.

Other intangible assets at March 31, 2017 and 2018 consist of the following:


	Millions of yen
	2017			2018
Intangible assets that have indefinite useful lives:
Trade names	¥	74,489		¥	80,844
Asset management contracts		141,352			154,014
Others		6,395			8,311

		222,236			243,169

Intangible assets subject to amortization:
Software		89,714			99,315
Customer relationships		117,716			121,385
Others		73,866			89,028

		281,296			309,728
Accumulated amortization		(107,481	)		(113,797	)

Net		173,815			195,931

	¥	396,051		¥	439,100

The aggregate amortization expenses for intangible assets are ¥25,848 million, ¥26,252 million and ¥30,959 million in fiscal 2016, 2017 and 2018, respectively.

The estimated amortization expenses for each of five succeeding fiscal years are ¥30,277 million in fiscal 2019, ¥28,419 million in fiscal 2020, ¥23,379 million in fiscal 2021, ¥20,657 million in fiscal 2022 and ¥15,729 million in fiscal 2023, respectively.

Intangible assets subject to amortization increased during fiscal 2018 are ¥52,940 million. They mainly consist of ¥20,695 million of software and ¥13,441 million of customer relationships recognized in acquisitions. The weighted average amortization periods for the software and the customer relationships recognized in acquisitions are 5 years and 12 years, respectively.

As a result of the impairment test, the Company and its subsidiaries recognized an impairment loss of ¥295 million on intangible assets included in Investment and Operation segment during fiscal 2016. The Company and its subsidiaries recognized an impairment loss of ¥411 million on intangible assets included in Overseas Business segment during fiscal 2017. The Company and its subsidiaries recognized an impairment loss of ¥194 million on intangible assets included in Investment and Operation segment during fiscal 2018. These impairment losses are included in other (income) and expense, net in the consolidated statements of income. These impairment losses are recognized due to the reduction in the estimated future cash flow, which brought the fair values of the intangible assets below its carrying amount. The fair values of the intangible assets were measured using the discounted cash flow methodologies.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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