Boeing 2008 Annual Report Download - page 77

We review long-lived assets, which includes property, plant and equipment, for impairment in
accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
(SFAS No. 144). Long-lived assets held for sale are stated at the lower of cost or fair value less cost to
sell. Long-lived assets held for use are subject to an impairment assessment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying
value is no longer recoverable based upon the undiscounted future cash flows of the asset, the amount
of the impairment is the difference between the carrying amount and the fair value of the asset.
Asset Retirement Obligations
In accordance with FIN 47, Accounting for Conditional Asset Retirement Obligations – an interpretation
of FASB Statement No. 143, we record all known asset retirement obligations for which the liability’s
fair value can be reasonably estimated, including certain asbestos removal, asset decommissioning
and contractual lease restoration obligations. Recorded amounts are not material.
We also have known conditional asset retirement obligations, such as certain asbestos remediation
and asset decommissioning activities to be performed in the future, that are not reasonably estimable
due to insufficient information about the timing and method of settlement of the obligation. Accordingly,
these obligations have not been recorded in the Consolidated Financial Statements. A liability for these
obligations will be recorded in the period when sufficient information regarding timing and method of
settlement becomes available to make a reasonable estimate of the liability’s fair value. In addition,
there may be conditional asset retirement obligations that we have not yet discovered (e.g. asbestos
may exist in certain buildings but we have not become aware of it through the normal course of
business), and therefore, these obligations also have not been included in the Consolidated Financial
Statements.
Goodwill and Other Acquired Intangibles
Goodwill and other acquired intangible assets with indefinite lives are not amortized, but are tested for
impairment annually and when an event occurs or circumstances change such that it is reasonably
possible that impairment may exist. Our annual testing date is April 1.
We test goodwill for impairment by first comparing the carrying value of net assets to the fair value of
the related operations. If the fair value is determined to be less than carrying value, a second step is
performed to compute the amount of the impairment. In this process, a fair value for goodwill is
estimated, based in part on the fair value of the operations, and is compared to its carrying value. The
shortfall of the fair value below carrying value represents the amount of goodwill impairment.
Indefinite-lived intangibles consist of brand and trade names acquired in business combinations. We
test these intangibles for impairment by comparing their carrying value to current projections of
discounted cash flows attributable to the brand and trade names. Any excess carrying value over the
amount of discounted cash flows represents the amount of the impairment.
Our finite-lived acquired intangible assets are amortized on a straight-line basis over their estimated
useful lives as follows: developed technology, 3 to 13 years; product know-how, 3 to 30 years;
customer base, 10 to 16 years; distribution rights, 9 to 30 years; and other, 3 to 25 years. In
accordance with SFAS No. 144, we evaluate the potential impairment of finite-lived acquired intangible
assets when appropriate. If the carrying value is no longer recoverable based upon the undiscounted
future cash flows of the asset, the amount of the impairment is the difference between the carrying
amount and the fair value of the asset.
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