Goldman Sachs 2015 Annual Report Download - page 181

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Assets Held for Sale
In the fourth quarter of 2015, the firm classified certain
consolidated investments in Europe within its Investing &
Lending segment as held for sale. As of December 2015,
assets and liabilities related to these investments were
included in “Other assets” and “Other liabilities and
accrued expenses,” respectively. Assets related to these
investments were $1.96 billion as of December 2015 and
substantially all consisted of “Property, leasehold
improvements and equipment.” Liabilities related to these
investments were $783 million as of December 2015 and
substantially all consisted of “Other secured financings”
carried at fair value under the fair value option.
Property, Leasehold Improvements and Equipment
Property, leasehold improvements and equipment in the
table above is net of accumulated depreciation and
amortization of $7.77 billion and $8.98 billion as of
December 2015 and December 2014, respectively.
Property, leasehold improvements and equipment included
$5.93 billion and $5.81 billion as of December 2015 and
December 2014, respectively, related to property, leasehold
improvements and equipment that the firm uses in
connection with its operations. The remainder is held by
investment entities, including VIEs, consolidated by the
firm. Substantially all property and equipment is
depreciated on a straight-line basis over the useful life of the
asset. Leasehold improvements are amortized on a straight-
line basis over the useful life of the improvement or the term
of the lease, whichever is shorter. Certain costs of software
developed or obtained for internal use are capitalized and
amortized on a straight-line basis over the useful life of the
software.
Goodwill and Identifiable Intangible Assets
The tables below present the carrying values of goodwill
and identifiable intangible assets.
Goodwill as of December
$ in millions 2015 2014
Investment Banking:
Financial Advisory $98 $98
Underwriting 183 183
Institutional Client Services:
Fixed Income, Currency and
Commodities Client Execution 269 269
Equities Client Execution 2,402 2,403
Securities Services 105 105
Investing & Lending 2—
Investment Management 598 587
Total $3,657 $3,645
Identifiable Intangible Assets
as of December
$ in millions 2015 2014
Institutional Client Services:
Fixed Income, Currency and
Commodities Client Execution $92 $138
Equities Client Execution 193 246
Investing & Lending 75 18
Investment Management 131 113
Total $491 $515
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 for impairment annually in the fourth
quarter or more frequently if events occur or circumstances
change that indicate an impairment may exist. When
assessing goodwill for impairment, 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 the results of the qualitative assessment are not
conclusive, a quantitative goodwill test is performed. The
quantitative goodwill 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 estimated 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 test is performed to measure the amount of
impairment, if any. An impairment is equal to the excess
of the carrying amount of goodwill over its fair value.
Goodwill was tested for impairment, using a quantitative
test, during the fourth quarter of 2015. The estimated fair
value of each of the reporting units exceeded its respective
net book value. Accordingly, goodwill was not impaired
and step two of the quantitative goodwill test was not
performed.
To estimate the fair value of each reporting unit, a relative
value technique was used because the firm believes market
participants would use this technique to value the firm’s
reporting units. The relative value technique applies
observable price-to-earnings multiples or price-to-book
multiples and projected return on equity of comparable
competitors to reporting units’ net earnings or net book
value. The net book value of each reporting unit reflects an
allocation of total shareholders’ equity and represents the
estimated amount of total shareholders’ equity required to
support the activities of the reporting unit under currently
applicable regulatory capital requirements.
Goldman Sachs 2015 Form 10-K 169