JP Morgan Chase 2009 Annual Report Download - page 227

JPMorgan Chase & Co./2009 Annual Report 225
Other intangible assets
During 2009, purchased credit card relationships, other credit card-related intangibles, core deposit intangibles and other intangibles
decreased $960 million, primarily reflecting amortization expense, partially offset by foreign currency translation adjustments related to the
Firm’s Canadian credit card operations.
The components of credit card relationships, core deposits and other intangible assets were as follows.
2009 2008
Gross Accumulated
Net
carrying Gross Accumulated
Net
carrying
December 31, (in millions) amount amortization value amount amortization value
Purchased credit card relationships $ 5,783 $ 4,537 $ 1,246 $ 5,765 $ 4,116 $
1,649
Other credit card–related intangibles 894 203 691 852 109
743
Core deposit intangibles 4,280 3,073 1,207 4,280 2,683
1,597
Other intangibles(a) 2,200 723 1,477 2,376 784
1,592
(a) The decrease in other intangibles gross amount and accumulated amortization from December 2008 was primarily attributable to the removal of fully amortized assets.
Amortization expense
The Firm’s intangible assets with finite lives are amortized over their useful lives in a manner that best reflects the economic benefits of the intan-
gible asset. $517 million of intangible assets related to asset management advisory contracts were determined to have an indefinite life and are not
amortized.
The following table presents amortization expense related to credit card relationships, core deposits and all other intangible assets.
Year ended December 31, (in millions) 2009 2008 2007
Purchased credit card relationships $ 421 $ 625 $ 710
Other credit card–related intangibles 94 33 11
Core deposit intangibles 390 469 554
Other intangibles(a) 145 136 119
Total amortization expense $ 1,050 $ 1,263 $ 1,394
(a) Excludes amortization expense related to servicing assets on securitized automobile loans, which is recorded in lending and deposit-related fees, of $2 million, $5 million
and $9 million, for the years ended 2009, 2008, and 2007, respectively.
Future amortization expense
The following table presents estimated future amortization expense related to credit card relationships, core deposits and all other intangible
assets at December 31, 2009.
Year ended December 31, (in millions)
Purchased credit
card relationships
Other credit
card-related intangibles
Core deposit
intangibles
All other
intangible assets
Total
2010 $ 354 $ 103 $ 329 $ 127 $ 913
2011 290 102 284 117 793
2012 252 105 240 113 710
2013 213 104 195 109 621
2014 109 100 106 105 420
Impairment
The Firm’s intangible assets with indefinite lives are tested for
impairment on an annual basis, or more frequently if events or
changes in circumstances indicate that the asset might be impaired.
The impairment test for indefinite-lived intangible assets compares
the fair value of the intangible asset to its carrying amount. If the
carrying value exceeds the fair value, then an impairment charge is
recognized for the difference. Core deposits and credit card rela-
tionships as well as other acquired intangible assets determined to
have finite lives, are amortized over their estimated useful lives in a
manner that best reflects the economic benefits of the intangible
asset. The impairment test for a finite-lived intangible asset com-
pares the undiscounted cash flows associated with the use or
disposition of the intangible asset to its carrying value. If the sum of
the undiscounted cash flows exceeds its carrying value, then no
impairment charge is recorded. If the sum of the undiscounted cash
flows is less than its carrying value, then an impairment charge is
recognized to the extent the carrying amount of the asset exceeds
its fair value.