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Intangible Assets Including Goodwill
12 Months Ended
Dec. 31, 2020
Intangible Assets Including Goodwill  
Intangible Assets Including Goodwill

NOTE N. INTANGIBLE ASSETS INCLUDING GOODWILL

Intangible Assets

The following table presents the company’s intangible asset balances by major asset class:

($ in millions)

 

Gross Carrying

Accumulated

Net Carrying

At December 31, 2020:

Amount

Amortization

Amount

*

Intangible asset class

 

Capitalized software

$

1,777

$

(814)

$

963

Client relationships

 

8,838

 

(2,056)

 

6,783

Completed technology

 

5,957

 

(1,671)

 

4,286

Patents/trademarks

 

2,246

 

(499)

 

1,747

Other**

 

56

 

(39)

 

16

Total

$

18,874

$

(5,079)

$

13,796

*

Includes an increase in net intangible asset balance of $279 million due to foreign currency translation.

**

Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems.

($ in millions)

    

    

 

Gross Carrying

Accumulated

Net Carrying

At December 31, 2019:

    

Amount

Amortization

Amount

*

Intangible asset class

 

Capitalized software

$

1,749

$

(743)

$

1,006

Client relationships

 

8,921

 

(1,433)

 

7,488

Completed technology

 

6,261

 

(1,400)

 

4,861

Patents/trademarks

 

2,301

 

(445)

 

1,856

Other**

 

56

 

(31)

 

24

Total

$

19,287

$

(4,052)

$

15,235

*

Includes a decrease in net intangible asset balance of $42 million due to foreign currency translation.

**

Other intangibles are primarily acquired proprietary and nonproprietary business processes, methodologies and systems.

There was no impairment of intangible assets recorded in 2020 and 2019. The net carrying amount of intangible assets decreased $1,439 million during the year ended December 31, 2020, primarily due to intangible asset amortization, partially offset by additions of capitalized software. The aggregate intangible amortization expense was $2,468 million and $1,850 million for the years ended December 31, 2020 and 2019, respectively. The increase in intangible amortization expense during 2020 was primarily due to an increase in the gross carrying amount of intangible assets from the Red Hat acquisition which closed in the third quarter of 2019. In addition, in 2020 and 2019, respectively, the company retired $1,483 million and $946 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount.

The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet is estimated to be the following at December 31, 2020:

    

Capitalized

    

Acquired

    

($ in millions)

Software

Intangibles

Total

2021

$

544

$

1,809

$

2,353

2022

 

305

 

1,746

 

2,051

2023

 

114

 

1,432

 

1,546

2024

 

0

 

1,382

 

1,383

2025

 

 

1,364

 

1,364

Thereafter

 

 

5,099

 

5,099

Goodwill

The changes in the goodwill balances by reportable segment, for the years ended December 31, 2020 and 2019, are as follows:

($ in millions)

    

    

    

    

    

  

 

Foreign

Currency

 

Purchase

Translation

 

Balance at

Goodwill

Price

and Other

Balance at

    

Segment

January 1, 2020

Additions

Adjustments

         Divestitures

Adjustments

**      

December 31, 2020

 

Cloud & Cognitive Software

$

43,037

$

362

$

(139)

$

$

675

$

43,934

Global Business Services

 

5,775

 

205

 

 

 

165

 

6,145

Global Technology Services

 

7,141

 

 

 

 

104

 

7,245

Systems

 

2,270

 

8

 

 

 

15

 

2,293

Total

$

58,222

$

575

$

(139)

$

$

960

$

59,617

($ in millions)

    

    

    

    

    

    

 

Foreign

Currency

 

Purchase

Translation

 

Balance at

Goodwill

Price

and Other

    

Balance at

    

Segment

January 1, 2019

Additions

Adjustments

Divestitures

Adjustments

**      

December 31, 2019

 

Cloud & Cognitive Software*

$

24,463

$

18,399

$

133

$

$

41

$

43,037

Global Business Services

 

4,711

 

1,059

 

1

 

(1)

 

5

 

5,775

Global Technology Services

 

3,988

 

3,119

 

 

 

34

 

7,141

Systems

 

1,847

 

525

 

(110)

 

 

7

 

2,270

Other—divested businesses*

 

1,256

 

 

 

(1,256)

 

 

Total

$

36,265

$

23,102

$

24

$

(1,257)

$

87

$

58,222

*

Recast to conform to 2020 presentation.

**

Primarily driven by foreign currency translation.

There were no goodwill impairment losses recorded during 2020 or 2019 and the company has no accumulated impairment losses.

Purchase price adjustments recorded in 2020 and 2019 were related to acquisitions that were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. During 2020, net purchase price adjustments recorded to noncurrent tax assets and liabilities were related to the Red Hat acquisition. Net purchase price adjustments recorded in 2019 were not material.