Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 10 – Goodwill and Intangible Assets

The changes in the carrying amount of goodwill are as follows:

	Total Company			KFC			Pizza Hut			All Other Segments
Balance as of December 31, 2021
Goodwill, gross	$	2,533		$	2,040		$	20		$	473
Accumulated impairment losses (a)		(391	)		—			—			(391	)
Goodwill, net		2,142			2,040			20			82
Goodwill acquired(b)		16			15			1			—
Effect of currency translation adjustment		(111	)		(106	)		(1	)		(4	)
Balance as of June 30, 2022
Goodwill, gross		2,438			1,949			20			469
Accumulated impairment losses (a)		(391	)		—			—			(391	)
Goodwill, net	$	2,047		$	1,949		$	20		$	78

(a)Accumulated impairment losses represent goodwill impairment attributable to the reporting units of Little Sheep and Daojia.

(b)Goodwill acquired resulted from the acquisition of restaurants from our existing franchisees. The acquisition is considered immaterial.

Intangible assets, net as of June 30, 2022 and December 31, 2021 are as follows:

	6/30/2022										12/31/2021
	Gross Carrying Amount(a)		Accumulated Amortization(a)			Accumulated Impairment Losses(b)			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Accumulated Impairment Losses(b)			Net Carrying Amount
Finite-lived intangible    assets
Reacquired franchise    rights	$	284	$	(230	)	$	—		$	54	$	295	$	(191	)	$	—		$	104
Huang Ji Huang   franchise related assets		22		(2	)		—			20		23		(2	)		—			21
Daojia platform		16		(4	)		(12	)		—		16		(4	)		(12	)		—
Customer-related assets		12		(9	)		(2	)		1		12		(9	)		(2	)		1
Others		9		(5	)		—			4		10		(5	)		—			5
	$	343	$	(250	)	$	(14	)	$	79	$	356	$	(211	)	$	(14	)	$	131
Indefinite-lived intangible    assets
Little Sheep trademark	$	54	$	—		$	—		$	54	$	57	$	—		$	—		$	57
Huang Ji Huang   trademark		80		—			—			80		84		—			—			84
	$	134	$	—		$	—		$	134	$	141	$	—		$	—		$	141
Total intangible assets	$	477	$	(250	)	$	(14	)	$	213	$	497	$	(211	)	$	(14	)	$	272

(a)Changes in gross carrying amount and accumulated amortization include effect of currency translation adjustments.

(b)Accumulated impairment losses represent impairment charges on intangible assets acquired from Daojia primarily attributable to the Daojia platform.

Amortization expense of finite-lived intangible assets was $26 million and $11 million for the quarters ended June 30, 2022 and 2021, respectively, and $52 million and $21 million for the years to date ended June 30, 2022 and 2021, respectively. As of June 30, 2022, expected amortization expense for the unamortized finite-lived intangible assets is approximately $49 million for the remainder of 2022, $4 million in 2023, and $2 million in each of 2024, 2025 and 2026. Increase in amortization expenses for finite-lived intangible assets in 2022 primarily relates to reacquired franchise rights resulting from the acquisition of Hangzhou KFC (Note 3).