Bank of Montreal 2015 Annual Report Download - page 152

Notes
A continuity of our goodwill by group of CGUs for the years ended October 31, 2015 and 2014 is as follows:
(Canadian $ in millions)
Personal and
Commercial
Banking
Wealth
Management
BMO
Capital
Markets Total
Canadian
P&C
U.S.
P&C Total
Traditional Wealth
Management Insurance Total
Balance – October 31, 2013 69 2,702 2,771 847 2 849 199 3,819
Acquisitions during the year – – – 1,268 – 1,268 – 1,268
Other (1) (1) 220 219 35 – 35 12 266
Balance – October 31, 2014 68 2,922 2,990 2,150 2 2,152 211 5,353
Disposals during the year – – – (21) – (21) – (21)
Other (1) – 471 471 245 – 245 21 737
Balance – October 31, 2015 68 (2) 3,393 (3) 3,461 2,374 (4) 2(5) 2,376 232 (6) 6,069
(1) Other changes in goodwill included the effects of translating goodwill denominated in foreign currencies into Canadian dollars, purchase accounting adjustments related to prior-year purchases and
disposals of businesses during the year.
(2) Relates primarily to bcpbank Canada, Diners Club and Aver Media LP.
(3) Relates primarily to New Lenox State Bank, First National Bank of Joliet, Household Bank branches, Mercantile Bancorp, Inc., Villa Park Trust Savings Bank, First National Bank & Trust, Ozaukee Bank,
Merchants and Manufacturers Bancorporation, Inc., Diners Club, AMCORE and M&I.
(4) Relates to BMO Nesbitt Burns Inc., Guardian Group of Funds Ltd., Pyrford International plc, Integra GRS, Lloyd George Management, M&I, Harris myCFO, Inc., Stoker Ostler Wealth Advisors, Inc.,
CTC Consulting LLC, AWMB and F&C Asset Management plc.
(5) Relates to AIG.
(6) Relates to Gerard Klauer Mattison & Co., Inc., BMO Nesbitt Burns Inc., Paloma Securities L.L.C. and M&I.
Intangible Assets
Intangible assets related to our acquisitions are initially recorded at their fair value at the acquisition date and subsequently at cost less accumulated
amortization. Software is recorded at cost less accumulated amortization. Amortization expense is recorded in amortization of intangible assets on the
Consolidated Statement of Income. The following table presents the changes in the balance of these intangible assets:
(Canadian $ in millions)
Customer
relationships
Core
deposits
Branch
distribution
networks
Purchased
software –
amortizing
Developed
software –
amortizing
Software
under
development Other Total
Cost as at October 31, 2013 389 754 154 544 1,606 243 29 3,719
Additions/disposals/other – – – 24 286 69 – 379
Acquisitions 171 – – – 17 – 303 491
Foreign exchange 66 61 13 (28) 24 4 (1) 139
Cost as at October 31, 2014 626 815 167 540 1,933 316 331 4,728
Additions/disposals/other (23) – (4) 7 345 42 53 420
Acquisitions –– – – – –––
Foreign exchange 80 129 27 15 42 11 37 341
Cost as at October 31, 2015 683 944 190 562 2,320 369 421 5,489
The following table presents the accumulated amortization of the intangible assets:
(Canadian $ in millions)
Customer
relationships
Core
deposits
Branch
distribution
networks
Purchased
software –
amortizing
Developed
software –
amortizing
Software
under
development Other Total
Accumulated amortization at October 31, 2013 124 397 152 489 1,018 – 28 2,208
Disposals/other – – – – – – – –
Amortization 61 69 2 20 221 – 9 382
Foreign exchange 44 40 12 (29) 11 – 8 86
Accumulated amortization at October 31, 2014 229 506 166 480 1,250 – 45 2,676
Disposals/other (8) – (3) – – – – (11)
Amortization 78 66 2 17 230 – 18 411
Foreign exchange 39 83 25 8 60 – (10) 205
Accumulated amortization at October 31, 2015 338 655 190 505 1,540 – 53 3,281
Carrying value at October 31, 2015 345 289 – 57 780 369 368 2,208
Carrying value at October 31, 2014 397 309 1 60 683 316 286 2,052
Intangible assets are amortized to income over the period during which we believe the assets will benefit us, on either a straight-line or an
accelerated basis, over a period not to exceed 15 years. We have $198 million as at October 31, 2015 ($178 million as at October 31, 2014) in
intangible assets with indefinite lives that relate primarily to fund management contracts.
The useful lives of intangible assets are reviewed annually for any changes in circumstances. We test finite life intangible assets for impairment
when events or changes in circumstances indicate that their carrying value may not be recoverable. Indefinite life intangible assets are tested
annually for impairment. If any intangible assets are determined to be impaired, we write them down to their recoverable amount, the higher of
value in use and fair value less costs to sell, when this is less than the carrying value.
There were write-downs of intangible assets of $1 million in the year ended October 31, 2015 ($1 million in 2014).
BMO Financial Group 198th Annual Report 2015 165