Motorola 2013 Annual Report Download - page 98

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96
Based on the results of the 2013 annual assessment of the recoverability of goodwill, the fair values of both reporting
units exceeded their book values, indicating that there was no impairment of goodwill.
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. 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 which included
a full step one fair value analysis similar to the valuation discussed above. The Company compared this prior fair value against
the current carrying value of each reporting unit noting fair value continued to significantly exceed 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 exceeded its carrying value. As such, the Company concluded it was more-likely-than-
not that the fair value of each reporting unit exceeded its carrying value. Therefore, the two-step goodwill impairment test was
not required.
15. Valuation and Qualifying Accounts
The following table presents the valuation and qualifying account activity for the years ended December 31, 2013, 2012
and 2011:
Balance at
January 1 Charged to
Earnings Used Adjustments* Balance at
December 31
2013
Allowance for doubtful accounts $ 51 $ 14 $ (8) $ (1) $ 56
Inventory reserves 163 73 (58) — 178
Customer reserves 144 615 (609)(4) 146
2012
Allowance for doubtful accounts 45 8 (4) 2 51
Allowance for losses on long-term
receivables** 10 — — (10) —
Inventory reserves 170 67 (73)(1) 163
Customer reserves 125 456 (416)(21) 144
2011
Allowance for doubtful accounts 49 7 (4)(7) 45
Allowance for losses on long-term
receivables 1 10 (1) — 10
Inventory reserves 157 37 (30) 6 170
Customer reserves 117 580 (565)(7) 125
* Adjustments include translation adjustments
** During 2012, the adjustment of $10 million within Allowance for Losses on Long-term Receivables relates to a reclass from non-current to current.