On February 1, 2022, the Company completed two business combinations, consisting of an immaterial acquisition in our Strategic Markets segment and a transfer of a majority interest (51%) of a managed infrastructure services joint venture in Japan (the “Exa transaction”) from our former Parent that could not be completed prior to the Separation due to local regulatory approvals. The non-controlling interest acquired in the Exa transaction represents the fair value of the joint venture prorated by the non-controlling shareholder’s percentage of ownership (49%). The Company closed the Exa transaction for consideration of $48 million, net of cash acquired of $59 million. Acquisition costs associated with these two acquisitions were immaterial and expensed as incurred. The Exa transaction enabled us to seamlessly continue our relationships with certain key customers in Japan. The purchase price allocation for the business combinations is preliminary, and there may be changes in the allocation of consideration to assets acquired and liabilities assumed, including intangible assets and goodwill, for up to twelve months from the acquisition closing dates.

The following table summarizes total consideration transferred, fair value of net assets acquired, net liabilities assumed and goodwill for the Exa transaction:

* Intangible assets acquired consist of $16 million of patents and trademarks and $91 million of customer relationships.

Intangible Assets

The following tables present the Company’s intangible asset balances by major asset class.


	At December 31, 2022						At March 31, 2022
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
(Dollars in millions)	Amount		Amortization		Amount		Amount		Amortization		Amount
Capitalized software	$	61	$	(16)	$	45	$	16	$	(16)	$	1
Customer relationships*		232		(132)		100		229		(100)		129
Completed technology		20		(20)		—		20		(20)		—
Patents and trademarks*		18		(5)		13		18		(2)		16
Total	$	331	$	(173)	$	158	$	283	$	(138)	$	145

* Amounts at December 31, 2022 include effects from foreign currency translation.

The net carrying amount of intangible assets increased by $13 million during the nine months ended December 31, 2022, primarily due to additions to capitalized software and foreign currency translation. The aggregate intangible asset amortization expense was $11 million and $36 million for the three and nine months ended December 31, 2022, compared to $11 million and $30 million for the three and nine months ended December 31, 2021. The amortization expense for these periods primarily relate to assets acquired via business combinations.

The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet was estimated to be the following at December 31, 2022:


	Capitalized		Customer		Patents and
(Dollars in millions)	Software		Relationships		Trademarks		Total
Year ending March 31:
2023 (remaining three months)	$	1	$	9	$	1	$	10
2024		12		27		3		43
2025		12		24		3		39
2026		10		20		3		34
2027		9		17		3		29
Thereafter		—		2		—		2

Goodwill

The changes in the goodwill balances by segment for the nine months ended December 31, 2022 were as follows:


			Additions and
(Dollars in millions)	Balance at		Other		Balance at
Segment	March 31, 2022		Adjustments*		December 31, 2022
United States	$	—	$	—	$	—
Japan		506		(10)		495
Principal Markets		142		—		142
Strategic Markets		176		—		176
Total	$	823	$	(10)	$	812

* Primarily related to foreign currency translation.

Management reviews goodwill for impairment annually during the fourth quarter of the calendar year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable by first assessing qualitative factors to determine if it is more likely than not that fair value is less than carrying value.

We use an income-based approach where fair value is determined using a discounted cash flow model that requires significant judgment with respect to revenue and growth rates, based upon annual budgets and long-term strategic plans. Fair value estimates employed in our annual impairment review of goodwill involve using various assumptions. Assumptions critical to our fair value estimates were discount rates, expected revenue growth and projected EBITDA margins used in determining the fair value of the reporting units. These and other assumptions are impacted by economic conditions and expectations of management and may change based on different facts and circumstances. We believe the assumptions used to estimate future cash flows are reasonable, but there can be no assurance that the expected cash flows will be realized. The use of different assumptions would increase or decrease discounted cash flows or earnings projections and therefore could change impairment determinations.

We prepared our impairment test as of October 1, 2022 and determined that the fair values of each of our reporting units exceeded net book value by more than 50%. Among our reporting units, the narrowest difference between the calculated fair value and net book value was in our Principal Markets segment’s Canada reporting unit, whose calculated fair value exceeded its net book value by 53%. Future developments related to macroeconomic factors, including increases to the discount rate used, or changes to other inputs and assumptions, including revenue growth, could reduce the fair value of this and/or other reporting units and lead to impairment. There were no goodwill impairment losses recorded for the nine months ended December 31, 2022. Cumulatively, the Company has recorded $469 million in goodwill impairment charges within its former EMEA ($293 million) and current United States ($176 million) reporting units.