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62
NOTE 10 — GOODWILL
Changes in the carrying amount of goodwill were as follows:
(In millions)
June 30,
2012 Acquisitions Other
June 30,
2013 Acquisitions Other
June 30,
2014
Devices and
Consumer Licensing $ 866 $ 0 $ 0 $ 866
$ 0 $ 2 $ 868
Hardware:
Computing and
Gaming Hardware 1,641 75 (27) 1,689 0 9 1,698
Phone Hardware 0 0 0 0
5,458
(a) (104) 5,354
Total D&C
Hardware 1,641 75 (27) 1,689 5,458 (95) 7,052
Other 742 0 (4) 738
0 0 738
Total Devices and
Consumer 3,249 75 (31) 3,293 5,458 (93) 8,658
Commercial Licensing 10,054 4 (7) 10,051 2 5 10,058
Other 149 1,164 (2) 1,311 105 (5) 1,411
Total Commercial 10,203 1,168 (9) 11,362 107 0 11,469
Total goodwill $ 13,452 $ 1,243 $ (40) $ 14,655 $ 5,565 $ (93) $ 20,127
(a) Goodwill acquired during fiscal year 2014 related to the acquisition of NDS. See Note 9 – Business Combinations for
additional details.
The measurement periods for the valuation of assets acquired and liabilities assumed end as soon as information on the
facts and circumstances that existed as of the acquisition dates becomes available, but do not exceed 12 months.
Adjustments in purchase price allocations may require a recasting of the amounts allocated to goodwill retroactive to the
periods in which the acquisitions occurred.
Any change in the goodwill amounts resulting from foreign currency translations are presented as “Other” in the above
table. Also included in “Other” are business dispositions and transfers between business segments due to
reorganizations, as applicable.
As discussed in Note 21 – Segment Information and Geographic Data, during the first quarter of fiscal year 2014, we
changed our organizational structure as part of our transformation to a devices and services company. This resulted in a
change in our operating segments and reporting units. We allocated goodwill to our new reporting units using a relative
fair value approach. In addition, we completed an assessment of any potential goodwill impairment for all reporting units
immediately prior to the reallocation and determined that no impairment existed.
Goodwill Impairment
We test goodwill for impairment annually on May 1 at the reporting unit level using a discounted cash flow methodology
with a peer-based, risk-adjusted weighted average cost of capital. We believe use of a discounted cash flow approach is
the most reliable indicator of the fair values of the businesses.
No impairment of goodwill was identified as of May 1, 2014 or May 1, 2013. Upon completion of the fiscal year 2012 test,
the goodwill of our OSD unit (in Devices and Consumer Other under our current segment structure) was determined to be
impaired. The impairment was the result of the OSD unit experiencing slower than projected growth in search queries and
search advertising revenue per query, slower growth in display revenue, and changes in the timing and implementation of
certain initiatives designed to drive search and display revenue growth in the future. This goodwill impairment charge of
$6.2 billion also represented our accumulated goodwill impairment as of June 30, 2014 and 2013.