Goldman Sachs 2013 Annual Report Download - page 175

Notes to Consolidated Financial Statements
Note 13.
Goodwill and Identifiable Intangible Assets
The tables below present the carrying values of goodwill
and identifiable intangible assets, which are included in
“Other assets.”
Goodwill
As of December
in millions 2013 2012
Investment Banking:
Financial Advisory $ 98 $ 98
Underwriting 183 183
Institutional Client Services:
Fixed Income, Currency and
Commodities Client Execution 269 269
Equities Client Execution 2,404 2,402
Securities Services 105 105
Investing & Lending 60 59
Investment Management 586 586
Total $3,705 $3,702
Identifiable
Intangible Assets
As of December
in millions 2013 2012
Investment Banking:
Financial Advisory $— $1
Institutional Client Services:
Fixed Income, Currency and
Commodities Client Execution 135 421
Equities Client Execution 2348 565
Investing & Lending 180 281
Investment Management 108 129
Total $ 671 $1,397
1. The decrease from December 2012 to December 2013 is related to the sale
of the firm’s television broadcast royalties in the first quarter of 2013.
2. The decrease from December 2012 to December 2013 is primarily related to
the sale of a majority stake in the firm’s Americas reinsurance business in
April 2013. See Note 3 for further information about this sale.
Goodwill
Goodwill is the cost of acquired companies in excess of the
fair value of net assets, including identifiable intangible
assets, at the acquisition date.
Goodwill is assessed annually in the fourth quarter for
impairment or more frequently if events occur or
circumstances change that indicate impairment may exist.
First, qualitative factors are assessed to determine whether
it is more likely than not that the fair value of a reporting
unit is less than its carrying amount. If results of the
qualitative assessment are not conclusive, a quantitative test
would be performed.
The quantitative goodwill impairment test consists of
two steps.
‰The first step compares the estimated fair value of each
reporting unit with its estimated net book value
(including goodwill and identifiable intangible assets). If
the reporting unit’s fair value exceeds its estimated net
book value, goodwill is not impaired.
‰If the estimated fair value of a reporting unit is less than
its estimated net book value, the second step of the
goodwill impairment test is performed to measure the
amount of impairment loss, if any. An impairment loss is
equal to the excess of the carrying amount of goodwill
over its fair value.
The firm performed a quantitative goodwill impairment
test during the fourth quarter of 2012 (2012 quantitative
goodwill test) and determined that goodwill was
not impaired.
When performing the quantitative test in 2012, the firm
estimated the fair value of each reporting unit and
compared it to the respective reporting unit’s net book
value (estimated carrying value). The reporting units were
valued using relative value and residual income valuation
techniques because the firm believes market participants
would use these techniques to value the firm’s reporting
units. The net book value of each reporting unit reflected an
allocation of total shareholders’ equity and represented the
estimated amount of shareholders’ equity required to
support the activities of the reporting unit under guidelines
issued by the Basel Committee on Banking Supervision
(Basel Committee) in December 2010. In performing its
2012 quantitative goodwill test, the firm determined that
goodwill was not impaired, and the estimated fair value of
the firm’s reporting units, in which substantially all of the
firm’s goodwill is held, significantly exceeded their
estimated carrying values.
Goldman Sachs 2013 Annual Report 173