Motorola 2012 Annual Report Download - page 101

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Goodwill
The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2010 to
December 31, 2012:
Government Enterprise
Tota l
Company
Balances as of January 1, 2010:
Aggregate goodwill acquired $ 350 $ 2,643 $ 2,993
Accumulated impairment losses — (1,564)(1,564)
Goodwill, net of impairment losses 350 1,079 1,429
Balance as of December 31, 2010:
Aggregate goodwill acquired 350 2,643 2,993
Accumulated impairment losses — (1,564)(1,564)
Goodwill, net of impairment losses 350 1,079 1,429
Goodwill acquired — 20 20
Goodwill divested — (21)(21)
Balance as of December 31, 2011:
Aggregate goodwill acquired/divested 350 2,642 2,992
Accumulated impairment losses — (1,564)(1,564)
Goodwill, net of impairment losses 350 1,078 1,428
Goodwill acquired — 83 83
Goodwill divested (1)— (1)
Balance as of December 31, 2012:
Aggregate goodwill acquired/divested 349 2,725 3,074
Accumulated impairment losses — (1,564)(1,564)
Goodwill, net of impairment losses $ 349 $ 1,161 $ 1,510
The Company conducts its annual assessment of goodwill for impairment in the fourth quarter of each year. The goodwill
impairment assessment is performed at the reporting unit level. A reporting unit is an operating segment or one level below an
operating segment. The Company has determined that the Government segment and Enterprise segment each meet the
definition of a reporting unit.
The Company performed a qualitative assessment to determine whether it was more-likely-than-not that the fair value of
each reporting unit was less than its carrying amount for fiscal year 2012 and fiscal year 2011. In performing this qualitative
assessment the Company assessed relevant events and circumstances including macroeconomic conditions, industry and market
conditions, cost factors, overall financial performance, changes in share price, and entity-specific events. In addition, the
Company considered the fair value derived for each reporting unit in conjunction with the 2010 goodwill impairment test. The
Company compared this prior fair value against the current carrying value of each reporting unit noting fair value significantly
exceeded carrying value for both reporting units. The Company performed a sensitivity analysis on the fair value determined
for each reporting unit in conjunction with the 2010 goodwill impairment test for changes in significant assumptions including
the weighted average cost of capital used in the income approach and changes in expected cash flows. For fiscal 2012, these
changes in assumptions and estimated cash flows resulted in an increase in fair value for the Government reporting unit and a
slight decrease in fair value for the Enterprise reporting unit. In spite of this small decrease in estimated fair value of the
Enterprise reporting unit, the reporting unit's fair value significantly exceeds its carrying value. For fiscal year 2011, these
changes in assumptions and estimated cash flows resulted in an increase in fair value for each reporting unit from the 2010 fair
values. As such, the Company concluded it is more-likely-than-not that the fair value of each reporting unit exceeds its carrying
value. Therefore, the two-step goodwill impairment test was not required for fiscal 2012 or fiscal 2011.
2010
The goodwill impairment test for fiscal 2010 was performed using the two step goodwill impairment analysis. In step one,
the fair value of each reporting unit is compared to its book value. Management must apply judgment in determining the
estimated fair value of these reporting units. Fair value is determined using a combination of present value techniques and
quoted market prices of comparable businesses. If the fair value of the reporting unit exceeds its book value, goodwill is not
deemed to be impaired for that reporting unit, and no further testing would be necessary. If the fair value of the reporting unit is
less than its book value, the Company performs step two. Step two uses the calculated fair value of the reporting unit to