Symantec 2012 Annual Report Download - page 153

SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)
Goodwill and intangible assets
Goodwill. Our methodology for allocating the purchase price relating to acquisitions is determined
through established valuation techniques. Goodwill is measured as the excess of the cost of the acquisition over
the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed.
We review goodwill for impairment on an annual basis during the fourth quarter of the fiscal year and whenever
events or changes in circumstances indicate the carrying value of goodwill may be impaired. In testing for a
potential impairment of goodwill, we determine the carrying value (book value) of the assets and liabilities for
each reporting unit, which requires the allocation of goodwill to each reporting unit. We then estimate the fair
value of each reporting unit, which are the same as our operating segments. The first step in evaluating goodwill
for impairment is to determine if the estimated fair value of equity is greater than the carrying value of equity of
each reporting unit. If step one indicates that impairment potentially exists or if a reporting unit has a zero or
negative carrying value, the second step is performed to measure the amount of impairment, if any. Goodwill
impairment exists when the estimated fair value of goodwill is less than its carrying value.
To determine the reporting units’ fair values in the current year analysis, we used the income approach
which is based on the estimated discounted future cash flows of that reporting unit. The estimated fair value of
each reporting unit under the income approach is corroborated with the market approach which measures the
value of a business through an analysis of recent sales or offerings of a comparable entity. We also consider our
market capitalization on the date of the analysis. The methodology applied in the current year analysis was
consistent with the methodology applied in the prior year analysis, but was based on updated assumptions, as
appropriate.
Our cash flow assumptions are based on historical and forecasted revenue, operating costs and other
relevant factors. To determine the reporting units’ carrying values, we allocated assets and liabilities based on
either specific identification or by using judgment for the remaining assets and liabilities that are not specific to a
reporting unit. Goodwill was allocated to the reporting units based on a combination of specific identification and
relative fair values, which is consistent with the methodology utilized in the prior year impairment analysis. The
use of relative fair values was necessary for certain reporting units due to impairment charges and changes in our
operating structure in prior years.
Prior to performing our second step in the goodwill impairment analysis, we perform an assessment of long-
lived assets, including intangible assets, for impairment. We apply a fair value based impairment test to the
carrying value of goodwill and indefinite-lived intangible assets on an annual basis in the fourth quarter of each
fiscal year or earlier if indicators of impairment exist.
Intangible assets. In connection with our acquisitions, we generally recognize assets for customer
relationships, developed technology (which consists of acquired product rights, technologies, databases, and
contracts), in-process research and development, trademarks and tradenames. Indefinite-lived intangible assets
are not subject to amortization. Finite-lived intangible assets are carried at cost less accumulated amortization.
Such amortization is provided on a straight-line basis over the estimated useful lives of the respective assets,
generally from one to eleven years. Amortization for developed technology is recognized in Cost of revenue as
Amortization of acquired product rights. Amortization for customer relationships and certain tradenames is
recognized in Operating expenses.
On an interim basis, we assess the impairment of identifiable intangible assets whenever events or changes
in circumstances indicate that an asset group’s carrying amount may not be recoverable. Recoverability of certain
finite-lived intangible assets, particularly customer relationships and finite-lived tradenames, would be measured
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