IBM 2014 Annual Report Download - page 98

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
97
In March2013, the FASB issued guidance on when foreign cur-
rency translation adjustments should be released to net income.
When a parent entity ceases to have a controlling financial interest
in a subsidiary or group of assets that is a business within a for-
eign entity, the parent is required to release any related cumulative
translation adjustment into net income. Accordingly, the cumula-
tive translation adjustment should be released into net income
only if the sale or transfer results in the complete or substantially
complete liquidation of the foreign entity in which the subsidiary
or group of assets had resided. The guidance was effective Janu-
ary1, 2014 and did not have a material impact in the consolidated
financial results.
In February 2013, the FASB issued guidance for the recognition,
measurement and disclosure of obligations resulting from joint
and several liability arrangements for which the total amount of the
obligation within the scope of the guidance is fixed at the report-
ing date. Examples include debt arrangements, other contractual
obligations and settled litigation matters. The guidance requires
an entity to measure such obligations as the sum of the amount
that the reporting entity agreed to pay on the basis of its arrange-
ment among its co-obligors plus additional amounts the reporting
entity expects to pay on behalf of its co-obligors. The guidance
was effective January1, 2014 and did not have a material impact
in the consolidated financial results.
In February 2013, the FASB issued additional guidance regard-
ing reclassifications out of AOCI. The guidance requires entities
to report the effect of significant reclassifications out of AOCI on
the respective line items in net income unless the amounts are
not reclassified in their entirety to net income. For amounts that
are not required to be reclassified in their entirety to net income
in the same reporting period, entities are required to cross-refer-
ence other disclosures that provide additional detail about those
amounts. For the company, the new guidance was effective on a
prospective basis for all interim and annual periods beginning Jan-
uary1, 2013 with early adoption permitted. The company adopted
the guidance in its December31, 2012 financial statements. There
was no impact in the consolidated financial results as the guidance
related only to additional disclosures.
In July 2012, the FASB issued amended guidance that simpli-
fies how entities test indefinite-lived intangible assets other than
goodwill for impairment. After an assessment of certain qualita-
tive factors, if it is determined to be more likely than not that an
indefinite-lived intangible asset is impaired, entities must perform
the quantitative impairment test. Otherwise, the quantitative test
is optional. The amended guidance was effective for annual and
interim impairment tests performed for fiscal years beginning after
September15, 2012, with early adoption permitted. The company
adopted this guidance for its 2012 impairment testing of indefinite-
lived intangible assets performed in the fourth quarter. There was
no impact in the consolidated financial results.
NOTE C.
ACQUISITIONS/DIVESTITURES
Acquisitions
Purchase price consideration for all acquisitions, as reflected in
the tables in this note, is paid primarily in cash. All acquisitions
are reported in the Consolidated Statement of Cash Flows net of
acquired cash and cash equivalents.
2014
In 2014, the company completed six acquisitions at an aggregate
cost of $608 million.
The Software segment completed acquisitions of five privately
held companies: in the first quarter, Aspera, Inc. (Aspera) and Clou-
dant, Inc. (Cloudant); in the second quarter, Silverpop Systems, Inc.
(Silverpop) and Cognea Group Pty LTD (Cognea); and in the third
quarter, CrossIdeas Srl (CrossIdeas). Global Technology Services
(GTS) completed one acquisition: in the third quarter, Lighthouse
Security Group, LLC (Lighthouse), a privately held company.
The following table reflects the purchase price related to these
acquisitions and the resulting purchase price allocations as of
December31, 2014:
2014 Acquisitions
($ in millions)
Amortization
Life (in Years)
Total
Acquisitions
Current assets $ 56
Fixed assets/noncurrent assets 39
Intangible assets
Goodwill N/A 442
Completed technology 5–7 68
Client relationships 7 77
Patents/trademarks 1–7 18
Total assets acquired 701
Current liabilities (26)
Noncurrent liabilities (67)
Total liabilities assumed (93)
Total purchase price $608
N/A—Not applicable
Each acquisition further complemented and enhanced the
company’s portfolio of product and services offerings. Aspera’s
technology helps make cloud computing faster, more predict-
able and more cost effective for big data transfers such as