Goodwill, Intangibles and Other Assets

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Other Assets

Goodwill

The gross carrying amounts of goodwill for the years ended December 31, 2017 and 2016 are as follows:



	Olefins Segment		Vinyls Segment			Total
Balance at December 31, 2015	$	30	$	32		$	62
Goodwill acquired during the year	—		888			888
Effects of changes in foreign exchange rates	—		(3		)	(3		)
Balance at December 31, 2016	30		917			947
Measurement period adjustment	—		55			55
Effects of changes in foreign exchange rates	—		10			10
Balance at December 31, 2017	$	30	$	982		$	1,012

Olefins Segment Goodwill

The fair value of the Olefins segment, the reporting unit assessed during October 2017, was calculated using both a discounted cash flow methodology and a market value methodology.

The discounted cash flow projections were based on a nine-year forecast, from 2018 to 2026, to reflect the cyclicality of the Company's Olefins business. The forecast was based on prices and spreads projected by IHS Markit ("IHS"), a chemical industry organization offering market and business advisory services for the chemical market, historical results and estimates by management, including its strategic and operational plans. Other significant assumptions used in the discounted cash flow projection included sales volumes based on production capacities. The future cash flows were discounted to present value using a discount rate of 8%. The significant assumptions used in determining the fair values of the reporting units using the market value methodology included the determination of appropriate market comparables and the estimated multiples of EBITDA a willing buyer was likely to pay.

Vinyls Segment Goodwill

Due to the Merger, the Company reorganized the reporting units of the Vinyls segment during 2017. Goodwill was reassigned based on a relative fair value approach. The fair values of the North America, Europe, Taiwan and China reporting units assessed during the April 2017 impairment test were calculated using both a discounted cash flow methodology and a market value methodology.

The discounted cash flow projections were based on a nine-year forecast, from 2018 to 2026 to reflect the cyclicality of the housing and construction markets as the Company's Vinyls businesses are significantly influenced by those markets. The forecast was based on prices and spreads projected by IHS, historical results and estimates by management, including its strategic and operational plans. Other significant assumptions used in the discounted cash flow projection included sales volumes based on production capacities. The future cash flows were discounted to present value using a discount rate ranging from 9% to 12%. The significant assumptions used in determining the fair values of the reporting units using the market value methodology include the determination of appropriate market comparables and the estimated multiples of EBITDA a willing buyer is likely to pay.

Intangible Assets

Intangible assets consisted of the following at December 31:



	2017							2016							Weighted Average Life
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net		Weighted Average Life
Customer relationships	$	754	$	(138	)	$	616	$	662	$	(51	)	$	611	10
Other intangible assets:
Licenses and intellectual property	124		(55		)	69		121		(44		)	77		13
Trademarks	93		(17		)	76		88		(7		)	81		13
Other	31		(15		)	16		31		(13		)	18		12
Total other intangible assets	$	248	$	(87	)	$	161	$	240	$	(64	)	$	176

Scheduled amortization of intangible assets for the next five years is as follows: $107, $106, $105, $103 and $81 in 2018, 2019, 2020, 2021 and 2022, respectively.

Other Assets, net

Other assets, net include net turnaround costs, cost-method investments, equity-method investments, restricted cash and deferred charges.

- 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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