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Goodwill
9 Months Ended
Sep. 30, 2012
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL
GOODWILL

On January 1, 2012, FirstEnergy adopted the amendment to the authoritative accounting guidance regarding the testing for goodwill impairment that provides the option to apply a qualitative assessment to determine whether or not it is necessary to apply the traditional two-step quantitative goodwill impairment test.

In a business combination, the excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed is recognized as goodwill. Goodwill is evaluated for impairment at least annually and more frequently if indicators of impairment arise. In evaluating goodwill for impairment, FirstEnergy first assesses qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount. If FirstEnergy concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying value, then no further testing of goodwill assigned to its reporting units is required. However, if FirstEnergy concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the two-step goodwill impairment test is performed to identify potential goodwill impairment and measure the amount of goodwill impaired to be recognized, if any.

The 2012 annual goodwill impairment test was performed during the third quarter primarily using a qualitative assessment approach. FirstEnergy assessed economic, industry and market considerations in addition to overall financial performance of its reporting units. FirstEnergy's reporting units are consistent with its operating entities, which aggregate to reportable segments and consist of Regulated Distribution, Regulated Transmission and Competitive Energy Services. Goodwill is allocated to these reportable segments based on the original purchase price allocation for acquisitions within the various reporting units.

As of September 30, 2012, goodwill balances for the Regulated Distribution, Regulated Transmission and Competitive Energy Services segments were $5,025 million, $526 million and $893 million, respectively. It was determined that the fair values of FirstEnergy's reporting units were, more likely than not, greater than their carrying values. No further goodwill testing was completed and no impairment was recognized.