TD Bank 2009 Annual Report Download - page 117

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TD BANK FINANCIAL GROUP ANNUAL REPORT 2009 FINANCIAL RESULTS 113
GOODWILL
Goodwill represents the excess purchase price paid on acquisitions
over the fair value assigned to identifiable net assets including identifiable
intangible assets. Goodwill is not amortized but is assessed for impair-
ment at least annually and when an event or change in circumstances
indicates that there may be an impairment. Goodwill is allocated to
reporting units that are either the operating business segment or the
reporting unit below the segment. Goodwill impairment is identified
by comparing the carrying value of the reporting unit with its fair
value. Impairment in goodwill is charged to the Consolidated Statement
of Income in the period in which the impairment is identified. As a
result of annual impairment testing, no impairment write-downs were
required for the years ended October 31, 2009, 2008, and 2007.
OTHER INTANGIBLES
The Bank’s other intangible assets consist primarily of core deposit
intangibles that represent the intangible value of depositor relationships
acquired when deposit liabilities are assumed in an acquisition and
term deposit, loan and mutual fund intangibles resulting from acquisi-
tions. Other intangible assets are amortized over their estimated useful
life (three to 20 years) proportionate to the expected economic benefit.
All other intangible assets are assessed for impairment at least
annually and when an event or change in circumstances indicates that
the assets might be impaired. As a result of annual impairment testing,
no impairment write-downs were required for the years ended
October 31, 2009, 2008, and 2007.
The following table presents details of the Bank’s other intangible
assets as at October 31:
GOODWILL AND OTHER INTANGIBLES
NOTE 9
Goodwill by Segment
(millions of Canadian dollars) Canadian Personal U.S. Personal
and Commercial Wealth and Commercial Wholesale
Banking Management Banking Banking Corporate Total
2009
Carrying value of goodwill at beginning of year $ 1,216 $ 585 $ 11,948 $ 146 $ 947 $ 14,842
Goodwill arising on acquisitions – 10 (56)3– – (46)
Foreign currency translation adjustments and other – (4) 223 – – 219
Carrying value of goodwill at end of year $ 1,216 $ 591 $ 12,115 $ 146 $ 947 $ 15,015
2008
Carrying value of goodwill at beginning of year $ 1,088 $ 344 $ 6,340 $ 146 $ – $ 7,918
Goodwill arising on acquisition of Commerce – – 6,330 – – 6,330
Transfers during the year1,2 128 242 (1,317) – 947 –
Sale of subsidiaries and other businesses – – (56) – – (56)
Foreign currency translation adjustments and other – (1) 651 – – 650
Carrying value of goodwill at end of year $ 1,216 $ 585 $ 11,948 $ 146 $ 947 $ 14,842
Other Intangibles
(millions of Canadian dollars) 2009 2008
Carrying Accumulated Net carrying Net carrying
value amortization value value
Core deposit intangible assets $ 5,310 $ (3,346) $ 1,964 $ 2,393
Other intangible assets 5,015 (4,433) 582 748
Total intangible assets1$ 10,325 $ (7,779) $ 2,546 $ 3,141
1During 2008, the insurance, credit card and wealth management businesses
previously included in the U.S. Personal and Commercial Banking segment were
transferred to the Canadian Personal and Commercial Banking and Wealth
Management segments to align with how these businesses are now being
managed on a North American basis. As a result, goodwill related to these
transferred businesses was also transferred.
2The amount of goodwill recorded in the Consolidated Balance Sheet arising from
the acquisition of Commerce is determined by using the average market price of
the Bank’s common shares over the two-day period before and after the terms of
the acquisition were agreed to and announced. Goodwill recorded in U.S.
Personal and Commercial Banking reflects the amount that would have been
recorded if the market price of the Bank’s common shares on the date
of acquisition was used. The difference is recorded in the Corporate segment.
3During the year ended October 31, 2009, goodwill related to the Commerce
acquisition decreased by $56 million from $6,330 million to $6,274 million, as
described in Note 7a).
1Future amortization expense for the carrying amount of other intangible assets is
estimated to be as follows for the next five years: 2010 – $572 million; 2011 –
$530 million; 2012 – $260 million; 2013 – $227 million; and 2014 – $198 million.