Honeywell 2012 Annual Report Download - page 72

amortized. Intangible assets determined to have definite lives are amortized over their useful lives.
Goodwill and indefinite-lived intangible assets are subject to impairment testing annually as of March
31, or whenever events or changes in circumstances indicate that the carrying amount may not be fully
recoverable. This testing compares carrying values to fair values and, when appropriate, the carrying
value of these assets is reduced to fair value. We completed our annual goodwill impairment test as of
March 31, 2012 and determined that there was no impairment as of that date. See Note 12 for
additional details on goodwill balances.
Other Intangible Assets with Determinable Lives—Other intangible assets with determinable
lives consist of customer lists, technology, patents and trademarks and other intangibles and are
amortized over their estimated useful lives, ranging from 2 to 24 years.
Long-Lived Assets—We periodically evaluate the recoverability of the carrying amount of long-
lived assets (including property, plant and equipment and intangible assets with determinable lives)
whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be fully recoverable. We evaluate events or changes in circumstances based on a number of factors
including operating results, business plans and forecasts, general and industry trends and, economic
projections and anticipated cash flows. An impairment is assessed when the undiscounted expected
future cash flows derived from an asset are less than its carrying amount. Impairment losses are
measured as the amount by which the carrying value of an asset exceeds its fair value and are
recognized in earnings. We also continually evaluate the estimated useful lives of all long-lived assets
and periodically revise such estimates based on current events.
Sales Recognition—Product and service sales are recognized when persuasive evidence of an
arrangement exists, product delivery has occurred or services have been rendered, pricing is fixed or
determinable, and collection is reasonably assured. Service sales, principally representing repair,
maintenance and engineering activities in our Aerospace and Automation and Control Solutions
segments, are recognized over the contractual period or as services are rendered. Sales under long-
term contracts in the Aerospace, Automation and Control Solutions and Performance Materials and
Technologies segments are recorded on a percentage-of-completion method measured on the cost-to-
cost basis for engineering-type contracts and the units-of-delivery basis for production-type contracts.
Provisions for anticipated losses on long-term contracts are recorded in full when such losses become
evident. Revenues from contracts with multiple element arrangements are recognized as each element
is earned based on the relative fair value of each element provided the delivered elements have value
to customers on a standalone basis. Amounts allocated to each element are based on its objectively
determined fair value, such as the sales price for the product or service when it is sold separately or
competitor prices for similar products or services.
Allowance for Doubtful Accounts—We maintain allowances for doubtful accounts for estimated
losses as a result of customer’s inability to make required payments. We estimate anticipated losses
from doubtful accounts based on days past due, as measured from the contractual due date, historical
collection history and incorporate changes in economic conditions that may not be reflected in historical
trends for example, customers in bankruptcy, liquidation or reorganization. Receivables are written-off
against the allowance for doubtful accounts when they are determined uncollectible. Such
determination includes analysis and consideration of the particular conditions of the account, including
time intervals since last collection, success of outside collection agencies activity, solvency of customer
and any bankruptcy proceedings.
Environmental Expenditures—Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by
past operations, and that do not provide future benefits, are expensed as incurred. Liabilities are
recorded when environmental remedial efforts or damage claim payments are probable and the costs
can be reasonably estimated. Such liabilities are based on our best estimate of the undiscounted future
costs required to complete the remedial work. The recorded liabilities are adjusted periodically as
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HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)