Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets

Goodwill and Intangible Assets

NOTE 4. Goodwill and Intangible Assets

Goodwill

Goodwill from acquisitions total $3.5 billion in 2019, none of which is deductible for tax purposes. There were no acquisitions that closed during 2018. The acquisition activity in the following table also includes the net impact of adjustments to the preliminary allocation of purchase price within the one year measurement-period following prior acquisitions, which increased goodwill by $7 million during 2018. The amounts in the “Translation and other” column in the following table primarily relate to changes in foreign currency exchange rates. The goodwill balance by business segment follows:

(Millions)	Safety and Industrial		Transportation and Electronics		Health Care		Consumer		Total Company
Balance as of December 31, 2017	$	5,077	$	1,886	$	3,317	$	233	$	10,513
Acquisition activity		7		—		—		—		7
Divestiture activity		(268)		—		(4)		—		(272)
Translation and other		(100)		(29)		(65)		(3)		(197)
Balance as of December 31, 2018		4,716		1,857		3,248		230		10,051
Acquisition activity		—		—		3,469		—		3,469
Divestiture activity		(49)		—		—		—		(49)
Translation and other		(46)		(27)		22		24		(27)
Balance as of December 31, 2019	$	4,621	$	1,830	$	6,739	$	254	$	13,444

Accounting standards require that goodwill be tested for impairment annually and between annual tests in certain circumstances such as a change in reporting units or the testing of recoverability of a significant asset group within a reporting unit. At 3M, reporting units correspond to a division.

As described in Note 19, effective in the second quarter of 2019, the Company realigned its former five business segments into four to enable the Company to better serve global customers and markets. In addition, effective in the first quarter of 2019, the Company changed its business segment reporting in its continuing effort to improve the alignment of its businesses around markets and customers. For any product changes that resulted in reporting unit changes, the Company applied the relative fair value method to determine the impact on goodwill of the associated reporting units. Goodwill balances reported above reflect these business segment reporting changes in the earliest period presented. During the first and second quarters of 2019, the Company completed its assessment of any potential goodwill impairment for reporting units impacted by this new structure and determined that no impairment existed. The Company also completed its annual goodwill impairment test in the fourth quarter of 2019 for all reporting units and determined that no impairment existed. In addition, the Company had no impairments of goodwill in 2018 or 2017.

Acquired Intangible Assets

The carrying amount and accumulated amortization of acquired finite-lived intangible assets, in addition to the balance of non-amortizable intangible assets, as of December 31, follow:

	December 31,		December 31,
(Millions)	2019		2018
Customer related intangible assets	$	4,316	$	2,291
Patents		538		542
Other technology-based intangible assets		2,124		576
Definite-lived tradenames		1,158		664
Other amortizable intangible assets		125		125
Total gross carrying amount	$	8,261	$	4,198
Accumulated amortization — customer related		(1,180)		(998)
Accumulated amortization — patents		(499)		(487)
Accumulated amortization — other technology-based		(435)		(333)
Accumulated amortization — definite-lived tradenames		(316)		(276)
Accumulated amortization — other		(90)		(88)
Total accumulated amortization	$	(2,520)	$	(2,182)
Total finite-lived intangible assets — net	$	5,741	$	2,016
Non-amortizable intangible assets (primarily tradenames)		638		641
Total intangible assets — net	$	6,379	$	2,657

Certain tradenames acquired by 3M are not amortized because they have been in existence for over 55 years, have a history of leading-market share positions, have been and are intended to be continuously renewed, and the associated products of which are expected to generate cash flows for 3M for an indefinite period of time.

Amortization expense for the years ended December 31 follows:

(Millions)	2019		2018		2017
Amortization expense	$	341	$	249	$	238

Expected amortization expense for acquired amortizable intangible assets recorded as of December 31, 2019 follows:

											After
(Millions)	2020		2021		2022		2023		2024		2024
Amortization expense	$	535	$	523	$	511	$	482	$	455	$	3,200

The preceding expected amortization expense is an estimate. Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, changes in foreign currency exchange rates, impairment of intangible assets, accelerated amortization of intangible assets and other events. The table above excludes the impact of the carrying value of finite-lived intangible assets associated with disposal groups classified as held-for-sale at December 31, 2019. See Note 3 for additional details. 3M expenses the costs incurred to renew or extend the term of intangible assets.