DELPHI 2015 Annual Report Download - page 100

Table of Contents
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held for use is considered impaired when the anticipated separately identifiable undiscounted cash flows from the asset are less
than the carrying value of the asset. In that event, a loss is recognized based on the amount by which the carrying value exceeds
the estimated fair value of the long-lived asset. Impairment losses on long-lived assets held for sale are recognized if the
carrying value of the asset is in excess of the asset's estimated fair value, reduced for the cost to dispose of the asset. Fair value
of long-lived assets is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk
involved (an income approach) and in certain situations Delphi’s review of appraisals (a market approach). Refer to Note 6.
Property, Net for additional information.
Assets and liabilities held for sale—The Company considers assets to be held for sale when management approves and
commits to a formal plan to actively market the assets for sale at a price reasonable in relation to their estimated fair value, the
assets are available for immediate sale in their present condition, an active program to locate a buyer and other actions required
to complete the sale have been initiated, the sale of the assets is probable and expected to be completed within one year (or, if it
is expected that others will impose conditions on the sale of the assets that will extend the period required to complete the sale,
that a firm purchase commitment is probable within one year) and it is unlikely that significant changes will be made to the
plan. Upon designation as held for sale, the Company records the assets at the lower of their carrying value or their estimated
fair value, reduced for the cost to dispose of the assets, and ceases to record depreciation expense on the assets.
Assets and liabilities of a discontinued operation are reclassified as held for sale for all comparative periods presented in
the consolidated balance sheet. For assets that meet the held for sale criteria but do not meet the definition of a discontinued
operation, the Company reclassifies the assets and liabilities in the period in which the held for sale criteria are met, but does
not reclassify prior period amounts.
Refer to Note 25. Discontinued Operations for further information regarding the Company's assets and liabilities held for
sale.
Intangible assets—The Company amortizes definite-lived intangible assets over their estimated useful lives. The
Company has definite-lived intangible assets related to patents and developed technology, customer relationships and trade
names. Indefinite-lived in-process research and development intangible assets are not amortized, but are tested for impairment
annually, or more frequently when indicators of potential impairment exist, until the completion or abandonment of the
associated research and development efforts. The Company also has intangible assets related to acquired trade names that are
classified as indefinite-lived when there are no foreseeable limits on the periods of time over which they are expected to
contribute cash flows. These indefinite-lived trade name assets are tested for impairment annually, or more frequently when
indicators of potential impairment exist. Costs to renew or extend the term of acquired intangible assets are recognized as
expense as incurred. No intangible asset impairments were recorded in 2015, 2014 or 2013. Refer to Note 7. Intangible Assets
and Goodwill for additional information.
Goodwill—Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business
combinations. The Company tests goodwill for impairment annually in the fourth quarter, or more frequently when indications
of potential impairment exist. The Company monitors the existence of potential impairment indicators throughout the fiscal
year. The Company tests for goodwill impairment at the reporting unit level. Our reporting units are the components of
operating segments which constitute businesses for which discrete financial information is available and is regularly reviewed
by segment management.
The impairment test involves first qualitatively assessing goodwill for impairment. If the qualitative assessment is not met
we then perform a quantitative assessment by first comparing the estimated fair value of each reporting unit to its carrying
value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of the
reporting unit. If the fair value exceeds carrying value, then we conclude that no goodwill impairment has occurred. If the
carrying value of the reporting unit exceeds its estimated fair value, a second step is required to measure possible goodwill
impairment loss. The second step includes hypothetically valuing the tangible and intangible assets and liabilities of the
reporting unit as if the reporting unit had been acquired in a business combination. Then, the implied fair value of the reporting
unit's goodwill is compared to the carrying value of that goodwill. If the carrying value of the reporting unit's goodwill exceeds
the implied fair value of the goodwill, we recognize an impairment loss in an amount equal to the excess, not to exceed the
carrying value. Refer to Note 20. Acquisitions and Divestitures, for further information on the goodwill attributable to the
Company's acquisitions.
Goodwill impairment—In the fourth quarter of 2015 and 2014, the Company completed a qualitative goodwill
impairment assessment, and after evaluating the results, events and circumstances of the Company, the Company concluded
that sufficient evidence existed to assert qualitatively that it is more likely than not that the estimated fair value of each
reporting unit remained substantially in excess of its carrying values. Therefore, a two-step impairment assessment was not
necessary. No goodwill impairments were recorded in 2015, 2014 or 2013. Refer to Note 7. Intangible Assets and Goodwill for
additional information.