Canon 2014 Annual Report Download - page 63

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61
C
ORPORATE
S
TRUCTUREBU
S
INE
SS
S
EGMEN
T
F
INANCIAL
S
ECTIO
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CORPORATE DAT
A
STRATEGY
7. ACQUISITIONS
During the year ended December 31, 2014, Canon acquired
several companies for a total cash consideration of ¥70,671
million, of which ¥30,696 million, ¥8,789 million, and
¥4,633 million was attributed to intangible assets, the relat-
ed deferred tax liabilities, and other net assets acquired,
respectively, and the residual amount of ¥44,131 million
was recorded as goodwill. The goodwill recorded is attrib-
utable primarily to expected synergies from the combined
operations of the acquired companies and Canon. None of
the goodwill is expected to be deductible for tax purposes.
Total acquisition-related costs were expensed as incurred
and were not significant.
Intangible assets acquired, which are subject to amor-
tization, consist of software of ¥13,290 million, customer
relationships of ¥1,628 million and other intangible assets
of ¥3,841 million. Canon has estimated the weighted aver-
age amortization period for the software and customer
relationships to be 7 years and 6 years, respectively. The
weighted average amortization period for all intangible
assets is approximately 9 years. Intangible assets acquired,
which are not subject to amortization, consist of in-process
research and development of ¥11,937 million.
The results of operations of the acquired companies were
included in Canon’s consolidated financial statements from
the respective acquisition dates and were not material. Pro
forma results of operations have not been disclosed because
the effects of these acquisitions were not material, individu-
ally and in the aggregate.
8. GOODWILL AND OTHER INTANGIBLE ASSETS
Intangible assets subject to amortization acquired during
the years ended December 31, 2014 and 2013, including
those recorded from businesses acquired, totaled ¥62,189
million and ¥42,630 million, which primarily consist of
software of ¥54,686 million and ¥37,419 million, respective-
ly. The weighted average amortization periods for intangible
assets in total acquired during the years ended December
31, 2014 and 2013 are approximately 5 years and 4 years,
respectively. The weighted average amortization periods
for software acquired during the years ended December 31,
2014 and 2013 are approximately 4 years.
The components of intangible assets subject to amortization at December 31, 2014 and 2013 were as follows:
December 31
Millions of yen
2014 2013
Gross carrying
amount
Accumulated
amortization
Gross carrying
amount
Accumulated
amortization
Software ¥ 312,069 ¥ 185,885 ¥ 271,425 ¥ 167,411
Customer relationships 53,494 46,713 50,792 39,957
Patented technologies 13,059 9,052 29,067 24,027
License fees 11,765 7,860 13,194 7,902
Other 36,625 18,281 32,319 16,094
¥ 427,012 ¥ 267,791 ¥ 396,797 ¥ 255,391
Aggregate amortization expense for the years ended
December 31, 2014, 2013 and 2012 was ¥49,741 million,
¥52,015 million and ¥46,160 million, respectively. Estimated
amortization expense for intangible assets currently held
for the next five years ending December 31 is ¥41,498 mil-
lion in 2015, ¥32,853 million in 2016, ¥22,583 million in
2017, ¥14,115 million in 2018, and ¥8,457 million in 2019.
Intangible assets not subject to amortization other than
goodwill at December 31, 2014 were ¥18,067 million, which
primarily consist of in-process research and development
recorded from businesses acquired. Intangible assets not
subject to amortization other than goodwill at December
31, 2013 were not significant.
Goodwill is included in other assets in the consolidated
balance sheets. For management reporting purposes, good-
will is not allocated to the segments. Goodwill has been allo-
cated to its respective segment for impairment testing.