Barclays 2005 Annual Report Download - page 271

Barclays PLC
Annual Report 2005 269
3.5
63 Differences between IFRS and US GAAP accounting principles (continued)
(a) Goodwill
The Group annually reviews the carrying value of its goodwill based on expected future earnings. In 2005, there was no impairment to goodwill
under US GAAP.
In 2004, goodwill recorded by the Group under US GAAP included amounts related to interests acquired following the restructuring of businesses to
which the Group had previously advanced funds. The Group identified an excess in the carrying value of the reporting units over their implied fair
value and recorded an impairment charge of £56m. The impairment was based on revised cash flow projections which were lower than forecasted
due to going concern issues within these businesses. Further, a partial write down of £12m was recorded in 2004 in relation to a Group entity
acquired prior to 1st January 1998 in respect of which the goodwill had been previously written off to reserves under UK GAAP. The impairment was
due to achieved cash flows being lower than those required to support the carrying value of goodwill.
The current carrying value of goodwill for US GAAP purposes has been allocated to the reportable business clusters of the Group:
Reallocation
At beginning between Exchange
of year clusters Additions and other 2005
£m £m £m £m £m
UK Banking 2,760 14 1 – 2,775
Wealth Management 548 – – – 548
International Retail and Commercial Banking 448 – 1,253 63 1,764
Barclaycard 336 – 24 12 372
Barclays Capital 42 (16) – – 26
Barclays Global Investors 116 (6) 139 9 258
Head office functions and other operations 10 8 – – 18
Goodwill 4,260 – 1,417 84 5,761
(b) Intangible assets
Core Licences
deposit Customer and other Other
intangible Brand lists contracts software 2005
£m £m £m £m £m £m
Cost or valuation
At beginning of year 513 33 313 57 12 928
Acquisitions/disposals as a result of business combinations 186 110 338 2 17 653
Additions ––876387
Fully amortised assets written off – (25) – – – (25)
Exchange/other 7 3 33 2 – 45
Cost carried forward 706 121 692 137 32 1,688
Accumulated amortisation and impairment
At beginning of year (284) (29) (129) (6) (4) (452)
Amortisation charge for year (80) (7) (58) (9) (6) (160)
Impairment charge – – – (1) – (1)
Fully amortised assets written off – 25 – – – 25
Exchange/other 5 2 (5) (1) – 1
Amortisation carried forward (359) (9) (192) (17) (10) (587)
Net book value 2005 347 112 500 120 22 1,101
Weighted average amortisation period for additions (months) 334 127 332 78 36
The amortisation expense for the net carrying amount of intangible assets is estimated to be £187m in 2006, £139m in 2007, £91m in 2008, £73m
in 2009 and £59m in 2010.
In addition to the acquired intangible assets shown in the table above a core deposit intangible asset with a net book value of £6m is recognised in
relation to the Group’s equity investment in FirstCaribbean International Bank.
As the amortisation of intangible assets is a deductible expense for income tax purposes, US GAAP requires the recognition of a tax amortisation
benefit. The tax amortisation benefit is taken to income over an appropriate life.